A home loan is a secured loan to build or buy a home. You can repay the home loan through convenient instalments payable over a fixed tenure or duration. A home loan is an extended financial commitment for purchasing a property by providing it as collateral.
Taking out a home loan is a significant commitment. You’ll have to pay a housing loan interest in the due course of time. For ease of sanction, you may have a co-applicant while applying for a loan.
Who Is a Co-applicant?
A co-applicant is an individual who participates in the loan approval and underwriting procedure with you. A co-applicant differs from a co-signer or guarantor in terms of the loan’s rights. A co-applicant can be considered secondary to the primary applicant in many situations. There are some requirements for becoming a co-applicant, but these vary from one lending instiution to another. Some of the standard prerequisites are as follows:
- A highly favoured co-applicant can be the partner of the primary applicant. Couples are a well-desired combination for the co-application of a home loan. When determining loan approval and eligibility, lenders consider both individuals’ income.
- A father and his son can also co-apply for a home loan.
- A single daughter can also apply to be a co-applicant for a home loan with one parent or both parents.
What Can a Co-applicant Do?
Suppose, due to any circumstance, the primary applicant cannot pay the housing loan interest or repay the loan. In that case, the co-applicant is liable for the loan. The primary applicant might pass away or be unable to service the loan for some reason. The lending institution then seeks collection and repayment from one applicant without regard to the cooperation agreement. Technically, the co-applicant becomes a co-borrower. Thus, as co-borrower, they are now obligated to repay the loan and fulfil other duties.
Advantages of Having a Co-applicant
There are many ways through which a co-applicant can help you with your home loan.
Shares the Same Obligations as You Do
Technically, the co-applicant becomes co-borrower. Thus, as a co-borrower, they are now obligated to repay the loan and fulfil other duties. The obligations associated with a home loan are significant. A home loan involves borrowing a large amount of money, which has to be repaid with interest within a fixed time frame. However, in the case of a joint home loan, you and your co-applicant will share these obligations. As a co-borrower, they are equally as responsible as you are.
Increase Your Credit Score With Their Credit Standing
If you and your co-applicant avail of a home loan and repay it during the scheduled time, both of your credit scores get boosted. In a joint home loan, both of your creditworthiness increase. It is highly beneficial when, in the future, you might need to avail credit urgently. A boost in your credit score will allow you to fulfil your aspirations and goals later. The same applies to your co-applicant.
Helps You Get a Greater Amount of Sanction and Provides Greater Affordability
In a joint home loan, both you and your co-applicant have to pay EMIs. It divides the debt burden between you two and can significantly lower your monthly payments. In this way, a joint home loan is more affordable. The lender can also sanction you a considerable home loans amount. It would allow you to purchase the home you desire without compromising.
Boost the Possibilities of Approval On a Nominal Interest Rate
In a joint home loan, yours and your co-applicant’s creditworthiness increases. Having a co-applicant boosts both your credit scores. A higher credit score lowers the possibility of your loan application being rejected or paying a more significant loan amount than prescribed. You can get better housing loan interest rate if your co-applicant has a good credit score. Thus, the loan becomes a lot more affordable. Repaying the loan is more convenient.
Conclusion
With the attractive advantages of a co-applicant, availing of a joint home loan becomes a desirable and cost-effective option for you. You can easily apply for a joint home loan online and benefit from its advantages.
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