A co-applicant in Home Loan is an individual who has an equal responsibility in repaying the loan just like the main borrower. As per the banks’ rule, the co-applicant must be blood relatives or immediate family member. The lending institutions allow up to 6 co-applicants in buying a property.
While applying with a co-applicant a standard credit application is required for both of the borrowers. The credit scores and credit profiles of both applicants is reviewed for loan approval. A Co-Borrower with good credit can help low credit primary borrower to obtain a loan approval.
A co-applicant is one who applies along with the borrower for a loan. The co-applicant has to be over 18 years of age. Most banks permit a few specified relations who can be co-applicants – brothers, parents, sons, husband or wife.
Getting an easy deal for a personal loan requires good credit and a decent regular income. Applying for a personal loan with a co-applicant is definitely possible, and usually preferable. It can improve your chances of approval and also help in securing a better loan rate.
If you have bad credit or no credit, having a co-applicant can help you get approved for a Car loan. When income is the primary concern, a co-borrower is a good option. A co-borrower will also have ownership rights when it comes to the vehicle being purchased.
Many people dream of having a home of their own and for that, they find themselves to be depended on a Home Loan. Getting housing finance isn’t as easy as it may seem. Many may be ineligible or have a low credit score for the required loan amount or tenure. Getting lesser quantum of the loan than they require becomes a hindrance in the process of purchasing a home. Bringing in a co-applicant for your Home Loan can solve this.
To enhance the eligibility for a home loan, borrowers often apply for the loan along with a co-borrower, usually the spouse. However, just being a co-borrower is not sufficient enough to claim the tax benefit that comes with home loan repayment. The co-applicant has to be co-owner to avail tax benefits of a home loan.
Here are some advantages of having a co-applicant for your Home Loan:
Additional Reading: Who can be a co-applicant and its advantages in the loan?
These were some of the attractive benefits of having a co-applicant for a Home Loan. However, if you are planning to become a co-applicant for someone else’s Home Loan, you should be aware of the fact that all co-applicants are jointly liable to repay the Home Loan. In case of default in payment, there could be an adverse effect on the credit scores of all the applicants.Says Gaurav Gaur, CEO and Founder, mudrahome.com