Top Things to Keep In Mind before Looping in a Co-Applicant for Your HDFC Home Loan

Home loan applicants' credit score, income, job profile and stability, age, and existing monthly obligations are amongst the chief eligibility criterion factored in by lenders when evaluating the applications. The degree of importance of all of these factors would vary depending on the credit risk matrix used by the lenders. Failure to accumulate the required HDFC home loan documents and/or qualify for any of these eligibility criteria after checking the criterion on the HDFC home loan eligibility calculator can lead to the rejection of your loan application. Hence, to deal with or avoid rejection of your home loan application, looping in a co-applicant to avail of a joint loan can boost your overall loan eligibility as well as approval chances.

Explain here are some vital aspects to keep in mind when thinking of availing a joint home loan by looping in a co-applicant: 

Who can become a home loan co-applicant?

The co-borrower of a home loan can only be from the list of close relations specified by the lender. Different home loan lenders or banks have their own set of conditions pertaining to the relations acceptable by them for joint home loan applications. To know whether your expected co-applicant makes it to the list of HDFC, it's advisable to go through HDFC home loan documents before submitting the application. Lenders usually tend to allow only spouses or immediate blood relatives of the primary applicant to be co-applicants. Some lenders might even hesitate or reject lending of joint home loans to cases like unmarried partners or siblings. But in the case of joint home loans for co-owned housing properties, lenders or banks usually compulsorily require all the co-owners of the house property to become co-borrowers of the home loan. Thus, it's best to check whether you fit the eligibility criterion by using the HDFC home loan eligibility calculator before submitting an application to HDFC.

What to keep in mind when availing of a joint home loan?

Besides the case of compulsory looping in of co-owners of housing properties to become co-borrowers of the home loan, other circumstances wherein adding a co-applicant can enhance the overall loan eligibility and improve approval chances for the primary borrower are- monthly debt obligations of primary applicant exceeding 50%-60% of income, risky job profile or employer profile, inadequate credit score, big loan amount, primary borrower close to or already retired, etc. One can check the eligibility criterion and whether they fit into it through the HDFC home loan eligibility calculator available on its website. 

Hence, those facing difficulties in single-handedly availing home loans due to failure to qualify for various eligibility parameters can go for adding a co-applicant to avail a joint home loan. Remember to successfully qualify and accumulate all the required HDFC home loan documents to avoid getting your application process delayed or, worse, getting the application rejected due to improper documentation.

Also, when looping in a co-applicant for your home loan, consider adding an earning member of your family as a co-applicant, as doing so reduces the credit risk for the lender as the co-applicant, too becomes equally liable for the repayment of the loan.

Benefits of looping in a co-applicant to avail joint home loan

Enhances loan eligibility- When taking forward your action of looping in someone as a co-applicant as per the listed relations in HDFC home loan documents, prefer someone having their own income source along with a good credit score and repayment capacity, as this enhances the overall joint home loan eligibility. Given that the co-applicant too becomes liable to make the repayment of the home loan, this lowers the overall credit risk for the lender, too, hence increasing the chances of availing the home loan by getting it approved. 

Similarly, those approaching their retirement can opt for looping in younger aged co-applicant who can assist in getting the home loan involving longer repayment tenure.  

Overall, when unsure or confused regarding your home loan eligibility, it’s always prudent to check the HDFC home loan eligibility, as this tool is designed exactly to assist you in determining your eligibility before submitting an application.

Higher tax benefits- Both the primary as well as co-applicant(s) can independently avail of the available tax benefits as per their contribution toward repayments of interest and principal component of home loan. A tax deduction is available for a limit of up to Rs 2 lakh upon making the repayment of interest component for self-occupied property under Section 24b and up to Rs 1.5 lakh in each financial year on account of the repayment of the principal component under Section 80C can be claimed by both primary and co-applicant of home loan. Hence, looping in a co-applicant for your home loan can result in higher overall tax benefits. But keep in mind that a condition is attached to availing of this tax benefit- the co-borrower can be eligible to avail available tax benefits only in case he/she is also the co-owner of the involved property. Also, it's always better to be completely transparent, honest and punctual with evaluation and submission of HDFC home loan documents, as this assists in timely completion and disbursal of required home loan.

Lower interest rates for women- Many home loan lenders do tend to offer interest rate concessions to women co-applicants. A concession of 5 bps (0.05%) is offered to them when compared to the rates applicable to male borrowers. Hence, it turns out to be a smart way to avail the concessional rates offered to female home loan borrowers by looping in a female co-applicant to reduce your overall home loan interest cost.

Additional ways to increase your home loan approval chances by enhancing eligibility

Besides the option of availing of a joint home loan upon fulfilling the criterion assessed by the HDFC home loan eligibility calculator, prospective borrowers facing difficulties in getting their home loan application approved can consider two more ways to boost their eligibility. First is by paying a higher down payment or margin contribution rather than contributing just the minimum of 10%-25% of the property's cost from their own pocket. The second way is by opting for a longer repayment tenure, as longer tenure implies lower EMI outgo and hence, lower FOIR. As both these moves reduce the credit risk for the lender, those having lower chances of loan approval can increase their home loan approval by trying to make a higher down payment or margin contribution and/or opt for a longer loan tenure.

What to watch out for a loan that may be rejected if the co-borrower's credit score is poor?

Remember that while evaluating your joint home loan application, the primary borrower as well as co-applicants credit score, income, age, debt to income ratio etc., are taken into consideration, as per the steps and criterion mentioned in HDFC home loan documents. In case your co-applicants credit score is on the lower side, your joint home loan application may get rejected, as lenders would be hesitant to lend to those who have not displayed disciplined credit repayment behaviour, which has led to poor credit scores. 

Lenders tend to approve joint applications only when they are satisfied with the repayment capacity of both primary borrower and co-applicant. Moreover, getting your home loan application rejected, irrespective of the reason behind it would lead to your credit score getting damaged. Sometimes, lenders can decide to price higher rates for you instead of rejecting your joint home loan in such cases.