Table Of Content ☰
- 1. What Is a Co-Applicant in a Home Loan?
- 2. What Is a Co-Owner of a Property?
- 3. Co-Applicant vs Co-Owner: Comparison Table
- 4. Co-Applicant vs Co-Owner: Key Differences
- 5. Co-Applicant and Co-Owner Example
- 6. What Happens If a Co-Owner Wants to Exit the Property or Loan?
- 7. Should You Add a Co-Applicant or Co-Owner?
- 8. Conclusion
- 9. Why Housegyan?
- 10. FAQs
The person who buys a house may be more than one person, particularly if the income is combined for a joint home loan application. Understanding co-applicant vs co-owner is important. A home loan co-applicant is responsible for the loan, a different home loan co-owner is responsible for the property.
What Is a Co-Applicant in a Home Loan?
The co-applicant of a house loan signifies a person who applies for the loan in addition to the primary borrower and will assume the burden of repaying the debt, banks can take into account earnings and credit files from both applicants, making them more likely to qualify for a loan.
What Is a Co-Owner of a Property?
A home loan co-owner is an individual who is legally named on the home loan ownership documents. Joint property ownership is a property agreement in which co-owners own a specific portion of the property.
Co-Applicant vs Co-Owner: Comparison Table
Co-Applicant vs Co-Owner: Key Differences
1. Loan Liability
Under the definition of Co-applicant vs Co-owner in home loan, the co-borrower is accountable to repay the loan
In a situation where one borrower fails to pay the EMIs, the lender may seek payment from the second borrower.
A co-owner who is not applying for the loan may not have the same repayment standpoint.
2. Ownership Rights
Co-owners are legally owners by name on the property documents.
A co-applicant does not become an owner automatically.
3. Tax Benefits
One should check the tax provisions, home loan tax benefits vary with ownership, repayment contribution, property type, etc.
Tax benefits are not available to a home loan co-applicant merely because he is linked to the loan.
4. Credit Responsibility
A co-applicant’s credit profile is linked to the joint home loan.
Regular EMIs help improve the credit score, as failure to make the payment can do the reverse.
Typically a non-borrower co-owner of a home loan has no direct credit responsibility.
Read More: Home Loan Refinancing: Benefits, Costs & Things to Consider.
Co-Applicant and Co-Owner Example
Co-Applicant + Co-Owner: Amit and Neha purchase a home worth ₹75 lakh with a joint home loan of ₹55 lakh, both names will be on the loan and the sale deed, making them responsible for paying back and owning the property
Only Co-Applicant: If Neha is only a co-applicant for the housing loan and does not appear as the named owner on the sale deed, she might be responsible for repayments, but she might not own the property.
What Happens If a Co-Owner Wants to Exit the Property or Loan?
1. Removing a Co-Owner
The co-owner of a home loan is legally required to pass their portion of ownership.
This can be done either by a sale deed or by a gift deed, release deed or relinquishment deed.
Stamp, registration fees and taxation regulations may apply.
If it's a mortgaged property, lender approval might also be necessary.
2. Removing a Co-Applicant From a Home Loan
The lender can review the borrower's remaining borrower's income, credit score, debt load, and ability to repay.
If eligibility is weak, then the bank might want to add a secondary borrower.
It may also be necessary to refinance or have the loan transferred.
Should You Add a Co-Applicant or Co-Owner?
This depends on which one you are looking for — loan eligibility or legal ownership.
1. When a Co-Applicant May Help
A home loan co-applicant can come in handy if you need to:
Increase home loan eligibility
Combine two incomes
Improve repayment capacity
Divide the monthly interest payments.
Go for a larger loan amount
Two applicants who have a monthly income of ₹60,000 can state that they have an aggregate income of ₹1.20 lakh. This can make them better-qualified than a single applicant, but the actual amount will vary by lender.
2. If Co-Ownership May Make Sense
A home loan co-owner arrangement is good when two people are contributing to a property and both have a desire to be legal owners. With a clear sense of joint ownership, there is less confusion when it’s time to resale, transfer, inherit or deal with family settlement.
Conclusion
The difference between co-applicant and co-owner is straightforward—The co-applicant is equally responsible for the loan, and the co-owner is a property owner. So before taking the decision of co-applicant vs co-owner in home loan, consider the following: EMI liability, ownership share, credit impact, home loan tax benefits, and exit rules.
Why Housegyan?
Housegyan covers home loans, house construction and property decisions in a simple language. With Housegyan you can compare a home loan co-applicant with a home loan co-owner and choose jointly owned property plans.
FAQs
1. What is the difference between a co-applicant and a co-owner?
A co-applicant is responsible for the loan; a co-owner has legal ownership of the property.
2. Can a co-owner be a co-applicant in a home loan?
Yes. A co-owner in the home loan can likewise be a co-applicant in the home loan.
3. Can a co-applicant claim home loan tax benefits?
Only when they adhere to the ownership, repayment and tax conditions applicable for home loan tax benefits.
4. What happens if a co-applicant stops paying the EMI?
Other co-borrower might be required to pay EMI, missed EMI can impact on Credit Score.
5. Can a co-applicant be removed from a home loan?
Yes but only after consulting the borrower's means of repayment.
