Applying For A Home Loan? Here Are The Bonuses Of Going Solo  

When Satish Shah found out he was not eligible for the loan amount he was seeking for buying a home, he went for the easy option. He asked his wife, Nita Shah, to become a co-applicant and a co-borrower to bridge the eligibility gap. A financially prudent person, Shah was also quite pleased with the fact that he and his wife both would be enjoying income-tax benefits. Buying a home and getting a loan sanctioned was not so difficult after all, thought Shah. What Shah did not pay heed to in his enthusiasm to become a homeowner was the fact that having a co-borrower might not be such a great idea if you think long-term.  

PropGuide tells you the advantages of going solo:

• In most cases, a co-applicant is also a co-owner of the property. While this is not a bad idea, to begin with, it might lead to possible conflicts over ownership issues. From the secondary co-owner's perspective, too, this is not always a good deal. If the primary borrower fails in discharging his repayment duties, the rights of the secondary co-owner over the property would also be jeopardised.

• When two people apply for a loan, two people are under debt. Both the parties will be held equally responsible for any lapses in repayment in the court of law. Your co-applicant is a near and dear family member and you do not want him to be in debt along with you in the case of a crisis.

• Having two borrowers in the same family also means that if there is a need to take another loan in future, your hands get tied. You have exhausted your collective “eligibility” to fund one house, and if circumstances demand you and your family arrange funds for some other purpose, you will be in an utterly hapless situation.  

• When you decide to go solo in your home loan application, you also programme yourself in such a way that your expenses do not exceed your earnings. You might like that beautiful 3-BHK unit in a plush locality, but your pocket allows you only a 1-BHK in a comparatively small locality. Going for the former with the help of a loan burden might sometimes prove to be a disastrous step.