If you are planning to buy a house, consider purchasing it jointly with your wife instead of solely in your name. By making her a co-owner, you can unlock numerous financial benefits, including savings on loans and tax exemptions. Here’s how this strategy can help you save a significant amount of money.
The central and state governments promote home ownership for women by providing various incentives. One of these benefits includes reduced stamp duty fees when a property is registered in a woman’s name. Several states, such as Delhi and Uttar Pradesh, offer stamp duty exemptions or reductions, leading to substantial savings.
Loan amounts are generally determined based on the applicant’s income. However, if your wife is employed and you apply for a joint loan, lenders will consider the combined income of both applicants. This can significantly increase your loan eligibility. Even if you apply with a co-applicant other than your wife, the loan limit may still rise. However, the total debt-to-income ratio of both applicants should ideally remain between 50% to 60% to ensure financial stability.
Many financial institutions offer reduced interest rates for home loans where a woman is a co-applicant. Typically, the interest rate for women borrowers is around 0.05% (5 basis points) lower than that for men. To avail of this benefit, the woman must be either the sole or joint owner of the property. A lower interest rate translates to reduced EMIs and long-term savings on interest payments.
A joint home loan provides double the tax benefits. Both co-owners can claim separate tax deductions, provided both contribute to the loan repayment. The following tax exemptions can be availed:
Under Section 80C: Each co-owner can claim a tax deduction of ₹1.5 lakh on the principal repayment, amounting to a total benefit of ₹3 lakh.
Under Section 24: Both can claim a deduction of ₹2 lakh each on the interest paid, summing up to ₹4 lakh.
Total Tax Benefit: The combined benefit under Sections 80C and 24 amounts to ₹7 lakh, depending on the loan amount and repayment.
A joint home loan application improves the chances of loan approval. If one applicant has a lower credit score or income, the second applicant’s financial standing can compensate, leading to an easier loan approval process. This is particularly beneficial for individuals facing challenges due to insufficient income, poor credit history, or existing financial liabilities.
Taking a joint home loan means both applicants are equally responsible for timely EMI payments. Consistently paying installments on time boosts the credit scores of both partners. Moreover, when two people share the financial burden, household budgeting becomes more manageable, preventing unnecessary financial stress.
Making your wife a co-owner of your property is a smart financial move that can lead to substantial savings and benefits. From lower stamp duty fees to tax deductions and cheaper loan interest rates, the advantages are numerous. Additionally, joint home ownership enhances loan eligibility and ensures financial security for both partners. If you’re planning to buy a house, consider this strategy to maximize your financial benefits and secure your future.
