An affordable home loan is one of the best ways to begin your home buying journey! However, some of us find it hard to be eligible for a home loan due to current financial circumstances or a low credit score. If you are one of them, you need not worry as you can still apply for a home loan, with a co-applicant.

Who is a co-applicant?

A co-applicant is someone who is listed alongside the main applicant – also known as the borrower on a home loan application. Adding a co-applicant has many benefits, such as if you are applying for a home loan with a co-applicant, the lender will consider your income and that of the co-applicant, which will help you get a higher loan amount. Therefore, you can purchase a larger house in the area of your choice.

What are the conditions for becoming a co-applicant?

A housing finance company, bank, or any other financial institution in India -only allows eligible family members to become co-applicants. While the remaining conditions are different for different institutions, here are some of the most common:

• The co-applicant must be above 21 and below 75 years of age while applying.
• It is better if the co-applicant is related to the borrower. The pairs listed below are widely accepted

Husband & Wife: This is considered to be the ideal pair with the highest chances of approvals on home loan applications. Either the husband’s or the wife’s income details are required to meet the loan eligibility requirements.

Father & Son: If the son is the main borrower in the home loan, his father can apply as a co-applicant and both of them will be required to submit proof of income to be considered. They must be joint owners of the property.

Mother & Son: Mother and son can apply as co-applicants if both can provide proof of income and are joint owners of the property.

Unmarried Daughter & Father/Mother: In order to be eligible to apply jointly with the parent, the property must only be in the name of the daughter. The income of the parent is not considered in this situation. This is done to avoid any legal issues once the daughter is married. The parent, however, will be responsible for the repayment of the loan if the daughter is unable to do so

Brothers: According to current guidelines, not more than two brothers are eligible to be co-applicants. They must be co-owners and must live together in the same property to become co-applicants.

Sometimes, relatives, friends, or even business partners may apply as co-applicants, but in such situations, home loan approval depends entirely on the provider.

• The co-owners of a property automatically become co-applicants in the home loan. It is important to note that there is no legal requirement to have a co-applicant when applying for a home loan. Most banks and financial institutions recommend it because of it’s advantages.

Here are some benefits of having a co-applicant while applying for a home loan:

• Higher eligibility & loan amount

Having a co-applicant instantly increases your chances of getting a higher loan amount. Institutions usually prefer the EMI amount to be nearly 40 to 45% of the applicant’s monthly income. In that case, with a co-applicant who also has a stable source of income, the total loan amount can go up by almost two times.

• Greater tax benefits

As co-applicants, one can enjoy combined benefits since each applicant can claim individual tax benefits based on their annual income. This not only results in significant savings but can also help save tax on stamp duty and registration charges.

• Better interest rates

If both the co-applicants have a stable income, have a good credit score, and can provide proof for the same, they become eligible to negotiate with the bank or financial institution for reduced interest rates.

Today, as a result of reliable online home loan facilities, becoming a co-applicant has become very easy. With DMI Housing Finance, for instance, users can simply log in to the DMI customer portal and enter their co-applicants details to apply and get information regarding combined eligibility to become a co-applicant. The DMI customer portal makes the loan application process simple and quick, giving customers access to instant in principle and quick approval for their loan.

Having a co-applicant can add a lot of value. So if you are applying for a home loan, do think about including a co-applicant and enjoy the valuable benefits!