Responsibilities of a co-signer in home loan

2 min read

The primary responsibility of a co-signer is to pay the home loan EMIs whenever the borrower defaults on payments. This is a very different responsibility from that of a co-applicant in a joint home loan. Co-applicants share the responsibility of monthly repayment, whereas co-signers don’t. Moreover, co-applicants can claim joint home loan tax exemption benefits, and this privilege does not extend over to co-signers.

What is the benefit of a co-applicant on a home loan?

Applying with a co-applicant can significantly improve your home loan application, boosting your chances of receiving the housing finance you need from the lender of your choice. Lenders rely on the applicant’s home loan eligibility to assess their loan application, and one’s repayment capacity is a significant aspect of their home loan eligibility. If for some reason, your home loan eligibility does not meet the lender’s benchmark, it could mean that your application can get rejected. 

However, when you apply with a co-applicant, you now have the eligibility of two or more applicants that can ensure the lender of your repayment capacity. Applying with a co-applicant or a home loan co-signer is especially useful if you fall under any of the categories listed below: 

  • If your age is nearing or beyond the lender’s maximum age benchmark
  • If your repayment capacity is not up to the mark 
  • If your request for the home loan principal amount is higher than your repayment capacity 
  • If your credit score is below 725, which is benchmarked as the ideal CIBIL score 

While selecting your co-applicant, ensure that you choose a relation who can be eligible to apply with you. Lenders have a set rule on who can be a co-applicant and checking beforehand can help you enhance your home loan application, so you receive the home finance you need to buy your property.

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