Tuesday, February 4, 2014

Who Can Be a Coapplicant For a Home Loan?

When it comes to home loans, the amount borrowed is usually quite large in value. This is the reason why in most situations, a joint applicant along with the primary borrower is often recommended. This has the following benefits:

    When both the applicants' income is pooled, the eligibility to avail a higher loan amount increases.
    When the co-owners of the property apply with the applicant, it makes for a stronger application.

One thing to always be kept in mind is that although all co-owners of a property are advised to be co-applicants, it is not a necessity that every co-applicant needs to be the co-owner of the property. Also, note that a minor will not be considered as a co-applicant. Although, co-applicants are encouraged, there are certain prerequisites that need to be fulfilled so that they may be considered for the loan application. Let us take a look at some of the conditions:

    The co-applicant must have a regular source of income (if income needs to be considered for higher loan amount)
    Friends or relatives cannot act as co-applicants.
    The credit history i.e. the repayment record of the joint applicant will be reviewed at the time of application.

There are certain preset relationships which will only be considered for joint eligibility. These include

i) Husband-wife

ii) father-son (or sons),

iii) father-daughter (provided daughter is unmarried and property is in daughter's name and father's income is not considered),

iv) mother-son (or sons),

v) brothers

Is it advantageous to have a co-applicant?

Yes, it is an advantage to the applicant if he or she applies along with a suitable co-applicant. Should the primary borrower default in paying the installments, it will become the responsibility of the co-applicant to repay the loan without having to forgo on the property.

Although, it is advisable to encourage co-applicants, it is not a legal requirement for everybody whilst they apply for a housing loan.

Note that, sisters or daughters cannot act as co-applicants with their brother or father or among themselves either. It is to avoid future disputes during the tenure of the home loan. As long as the preset conditions are met by the joint applicant, it would prove to be an advantage while applying for a home loan.

Also, if the secondary borrower's income is going to be considered, then his or her credit score as well as credit history will also be reviewed prior to loan approval.

No comments:

Post a Comment