Article provided by: The Elite Team Supreme Lending – Branch 614
It’s a pride becoming a home-owner, most notably in urban cities where the cost of properties is very high. For some, taking a home loan becomes a necessity; while some are buoyant enough to buy immediate properties. Due to different reasons, most people tend to apply for another home loan after taking advantage of the first one. First-time buyers might have a different thought, but those who are familiar with the benefits of taking home loan are ready to explore it furthermore.
Can home loan be jointly taken?
Spouses, parents, or siblings are entitled to obtain joint home loans together. Joint home loans aren’t given out to just any person anyhow except they are blood relatives such as parents and children or married couples.
Some banks give out joint home loans to brothers provided that they both are co-owners of the property. A person with a share of the property is known as co-owner, and a person liable to pay the loan amount is recognized as co-borrower. In some cases, banks require that co-owners of the home are also co-borrower in a joint home loan. If the co-applicants are spouses, then the co-ownership of the property is not mandatory. However, in the case of parents or siblings, co-ownership of the property becomes necessary.
Unmarried partners living together, sisters, or friends, are not permitted to apply for joint home loans; instead, they can be a co-owner of a property but not a co-borrower in a housing loan.
When spouses are joint applicants, the loan’s term can be a maximum of 20 years, in respect of the older applicant retirement age. If the co-applicants are blood relatives, the maximum time would be ten years. Also, in a situation where the parents’ income is considered for repayment, the maximum loan term might be then restricted to the older applicant’s retirement age.
Tax Benefits of Taking Home Loan
The ax benefits attached to a joint home loan are open to all the joint owners. Note that the property ownership is a requirement that qualifies you to enjoy any tax benefits against the property. The loan might be taken jointly, but if you’re not an owner in the property, then you won’t have access to any tax benefit. To be able to claim tax benefits on a property, you must be;
- A co-owner in the property,
- A co-borrower for the loan, and
- Completed property construction
Once all these conditions are met, the listed benefits can then be claimed –
For a self-occupied property – A maximum deduction of $3,000 can be claimed by each co-owner who is also co-applicant in the loan for interest on the home loan in their Income Tax Return. The interest on the home loan is allocated accordingly to the owners in the appropriate ratio of their ownership. Each borrower could claim a maximum interest benefit of up to $3,000. It also implies that the total interest claimed by the borrowers can’t go beyond the total interest paid for the loan.
Lastly, in a situation that warrants the repayment of principal, a maximum deduction of $2,000 can be claimed by each co-owner.
There’s nothing to panic over, if you’re overwhelmed as a first-timer, feel at ease to contact our group of professional mortgage bankers for further inquiries and assistance!