How Your Credit Score Gets Affected From a Joint Home Loan

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How Your Credit Score Gets Affected From a Joint Home Loan

  • Highlights

  • In joint home loan the property and the EMI are divided between the borrowers

  • Apply for a joint home loan when your income or credit score is lower than your loan amount

Owning a house is a big milestone. However, even if you earn well, you may not be able to afford the house of your dreams. Thankfully, there is a way to overcome this. You can apply for a joint home loan. Your spouse or a close family member can be the co-applicant.

How does your credit score get affected?

1) If your co-applicant defaults, you will have to make the entire payment yourself.
2) In case your co-applicant misses or delays a payment, it will lower your credit score as well.
3) Irresponsible behaviour from your co-applicant will reflect in your credit history too.

When should you consider a joint home loan?

Usually, it is wise to apply for a joint home loan when your income or credit score is lower than your loan amount. When there are many borrowers, the combined incomes of the borrowers come into play. Then, you can get the loan amount that you need. It is advisable to take a joint home loan with your spouse or a very close family member. This way, it is more convenient to manage repayments together. When you calculate your Home Loan EMI, you will find that having a co-borrower helps reduce your debt burden.

Keep in mind

1) Make sure that both borrowers understand their full liability as co-borrower.
2) Check the credit history and credit score of your co-borrower. This way, you will be aware of their spending and repayment habits.
3) Be wary of taking a joint home loan with someone who has a poor credit score.
4) It is important that both borrowers on a joint home loan repay home loan EMIs without delay and default.
5) Keep track of repayments that both you and your co-borrower make.
6) Try to make sure that your co-borrower is listed as the co-owner of the property.
7) Keep track of the terms and conditions of the loan in case of variations by the bank or NBFC.
8) Keep track of the housing loan market. Transfer your loan to another lender if you get favourable terms and conditions. This will include a reduced interest rate and even a  top up loan.
9) If your co-borrower is your spouse, both of you are liable to continue paying EMIs even after a divorce. Otherwise, both credit scores will suffer.

Additional Read: Gain Tax Benefits on Your Joint Home Loan

All About Joint Home Loans

Taking a joint loan is the best way to reduce your debt burden, provided you take the necessary precautions. The most important thing that matters, in order to maintain a good credit score, is that both parties should be diligent about the repayments.

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