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All you need to know about joint home loans

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A joint home loan will allow you to get a higher loan as the income of co-borrowers will be considered. The number of people who can avail a joint home loan can be anywhere between 4 and 6, depending on their individual credit profiles.

You want to buy your dream home. You apply for a home loan. The bank rejects the application saying you are not eligible for such a high amount as your income is low. This is where a joint loan becomes useful.

A joint home loan will allow you to get a higher loan as the income of co-borrowers will be considered. The number of people who can avail a joint home loan can be anywhere between 4 and 6, depending on their individual credit profiles.

WHO ALL CAN APPLY?

Joint home loans can be taken by an applicant along with a spouse. You can also apply jointly with parents or siblings, but there could be certain conditions which you need to check with the bank beforehand.

Adhil Shetty, CEO, Bankbazaar.com says, “A married couple or a parent and child can take a joint loan. Some banks allow brothers to take a joint home loan provided they will both be co-owners of the property. Banks insist that all co-owners of the home must be coborrowers in a joint home loan.

However, sisters, friends or unmarried couples living together are generally not allowed to take joint home loans by banks.

LOAN ELIGIBILITY

The home loan eligibility goes up in the case of joint home loans as the repayment capacity goes up depending on the income of the co-applicant. For example, assume you would like to buy a property worth Rs 1 crore. The bank is ready to fund 80% which is Rs. 80 lakh. Suppose your income does not meet this requirement, then you will be forced to look at a house which costs less. However, if your spouse is working, then both your income as well as your spouse’s income will be considered to determine the loan amount.

Renu Sud, managing director, HDFC, says, “If a women is a first applicant /co – applicant and sole or joint owner of the property then applicants can avail the home loan at 5 bps below the normal applicable home loan rate.”

About 35% of monthly income as EMIs for all debt is ideal. Anything more than that could cause trouble, especially when your EMIs rise due to an increase in interest rates.

REPAYMENT PROCESS

The repayment process for a joint home loan is similar to that of a regular home loan. The payment can be made from a single or joint account by way of cheques or electronic clearing system (ECS).

Co-borrowers can also share the number of EMIs between them such that a specific number of cheques can be issued by one borrower and the balance by the other.

Most importantly, repayment of the joint home loan is the collective responsibility of all the borrowers.

Always remember to pay the EMIs as per schedule. If one of you fail to pay the EMI then the other will be liable towards payment. In case of any delay or defaults in EMI, legal action is taken against the borrower as well as the co-borrower.

WHAT HAPPENS IN CASE OF A DISPUTE?

All home loan applicants should sign a separate Legal Liability Agreement which clearly defines liability of each party and helps sort the situation in case of any dispute. In case of any default, the bank can proceed with the recovery process against all the co-operatives.

TAX BENEFITS

Both the applicants can claim tax benefits on servicing of the housing loan. For example, if co-borrowers are servicing the loan jointly in equal proportion, then each of them can claim tax benefit of up to Rs 2 lakhs on interest payment which effectively means they can claim up to Rs 4 lacs jointly which otherwise would have been limited to Rs 2 lakhs only. This helps them to get the effective rate of interest on their loan down substantially which is a huge saving.

Sanjiv Bajaj – Managing Director, Bajaj Capital, says, “One can avail tax benefit on home loan up to Rs 1.5 lakh under Section 80C and 2 lakh under Section 24. But if you go for a joint home loan along with your spouse in the ratio of 50: 50, then both of you can claim these benefits separately. So the combined limit will be Rs 3 lakh under Section 80C and 4 lakh under Section 24. This can reduce your overall cost of loan for the family considerably.”

Bajaj adds that total deduction will be Rs 7 lakh and if both spouses are in the highest tax slab, they will get a tax benefit of Rs 210000- which is just double compared to an individual home loan, although this provision may vary from person to person.

Joint home loans are undeniably beneficial. So, joining hands with your better half makes good sense.

Source : businesstoday

Regulations

373 Maharashtra Cities To Fall Under PMAY Scheme

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The state of Maharashtra has added 232 cities to the existing 142 which makes it 373 cities under the Pradhan Mantri Awas Yojana Scheme (PMAY).

The officials at the housing department feel that this step will aid the government take up more projects under the PMAY scheme.

Sachin Kulkarni, Builder shared his concerns over the lack of coordination between the department in executing PMAY projects. He said, “This is a good sign. However, the PMO’s seriousness in promoting HFA is diluted by the time it reaches the authorities. Apart from collecting application from interested beneficiaries, nothing has moved on the ground in urban centres. I hope that this initiative moves on fast track”.

Maharashtra CM Devendra Fadnavis recently states that the in order to create more housing stock the state’s Slum Rehabilitation Authority scheme be brought under PMAY so that it can receive the subsidy to create more affordable housing. He clearly mentioned that the government intends to create more housing stock and it was taking various initiatives and making policy changes for it.

Also Read- Affordable Housing To Get A Boost With PMAY’s Scope To Be Extended To Private Lands

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Regulations

Real Estate Sector May Fall Under GST What Does It Mean For Buyers?

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One after the other the real estate sector has witnessed massive policy and law changes in its systems. Nonetheless, the tide has not passed yet. The GST council will take up a proposal to bring it under the uniform nationwide levy.

As the industry is still recovering from the RERA Act, the finance minister, Arun Jaitley said that there is a strong case to include real estate in the new indirect tax regime. He said this last week and also mentioned that GST Council will discuss it in November.

At present, the home buyers are paying 12 percent GST on under-construction properties. This percentage includes two taxes which are stamp duty and registration. The rate of which varies in each state but GST will make them uniform.

Santosh Dalvi, KPMG India partner (indirect tax) said, “If the entire real estate is brought under GST, they would have to abolish the stamp duty and we don’t know how the government plans to compensate the states for their loss.”

The stamp duty with registration and GST comes to approximately 18 percent for under construction properties. He further said, “So, it’s important to look at what rate it will be taxed at. We can then look at consumer prices”.

While agreeing, Bipin Sapra, EY partner (indirect tax), added, “It’s going to be a test for the government”.

Developers also pay taxes on raw materials. However, unlike other businesses, they don’t get any tax refunds through input credit. GST taxes every stage of the business activity to better compliance and compensates for it by permitting refunds.

Anuj Puri, Anarock Property Consultants chairman, said “By including real estate under GST, builders can get a fair amount of input credit, helping bring down costs,” He added that it would make homes cheaper for buyers.

According to Sapra, it will depend on the tax rate applicable.

Niranjan Hiranandani, co-founder of Hiranandani Group said, “Real estate under GST ambit means consumers will only have to pay one final tax.” He stated that with the commencement of RERA it brings transparency and GST would reduce the burden in terms of taxes payable while buying the home. He concluded, “Not only will this create positive sentiment but it should also boost actual sales”.

Also Read: Affordable Housing Is The Changing Face Of Indian Real Estate

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Regulations

Home Buyers Will Be Covered Against Builders Who Are Going Bankrupt

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In a move to protect home buyers from builders declaring their bankruptcy, the Insolvency & Bankruptcy Board of India (IBBI) has amended rules which make it necessary for any company to showcase how they have dealt with interests of all stakeholders. This is directed towards companies like Jaypee Infratech and some of the entities of Amrapali Group.

The regulator has informed about the revised rules last week. This will ensure that banks and other creditors do not get away by protecting their interests at the expense of others who are impacted by the action.  Banks are part of the creditors’ committee. They become an important decision-making body after a company is admitted for bankruptcy.

An expert bankruptcy lawyer said, “The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests.”

According to the new law that was enacted last year intends to speed up the resolution process in a period of 180 days, with a possible extension of 90 days. This will be done by appointing insolvency resolution professionals who will take charge of the company’s operations and prepare a plan. As per the law, an information memorandum will be finalized if the creditor’s committee is willing to take applications from other interested companies to take over the company.

The insolvency experts say that the law providing for the plan binds corporate debtor (the company) and its members, employees, guarantors, and creditors, other stakeholders involved in the resolution plan. However, there are no obligations mentioned in the rule to give any treatment to the stakeholders other than the financial creditors (banks) and operational creditors, which includes vendors and others who may have dues.

The National Company Law Tribunal, based on the comfort provided by the revised rules, will choose the final resolution plan based on bids that are received. The lawyer further said, “The tribunal will not clear the resolution plan without giving notice to all stakeholders and the flat buyers can raise objections at that point of time.”

Also Read: Tanvi Group Fail To Deliver Homes And Declare Bankruptcy

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