A joint loan can be both a blessing and a curse. While it gives you the security of another trusted person in it with you, it also presents the risk of the other person's financial situations and problems that you might not know about. Before entering into any sort of agreement, the loan should be discussed and understood by both sides, responsibilites should be allotted and the seriousness of a joint loan should be given proper consideration.
With most people, the need for a home loan arises because their income is not sufficient for an individual loan. In which case, they take the help of a family member usually or a trusted friend. The person usually has a better credit history and more collaterals to get the joint loan.
There are various terms to be understood when it comes to joint home loans:
1. Primary borrower: The main applicant for the loan.
2. Co-owner: holds the legal share of the property. Minors cannot be co-owners in India.
3. Co-applicant: also known as the joint applicant, he/she applies for the loan's sanction along with the primary borrower to supplement his/her income.They help in increasing eligibility.
4. Co-borrower: shares the responsibility of the loan with the primary borrower. He/she will have to pay back the loan in case of death or inability of the primary borrower to pay his/her share. Though, it is the main responsibility of the primary borrower to repay the loan, the co-borrower is equally responsible. In case of divorce or parting of ways, the joint loan can be split into individual loans with adequate permission from the bank.