Want to increase your home loan amount with a co-borrower? Be aware of the legal and financial implications.
According to your monthly salary, you are eligible for a certain amount of home loan. To increase your home loan amount, banks often recommend applying with a co-applicant. This is a surefire way of increasing the loan amount, but both borrowers must understand the implications.
Co-borrowing is not the same as co-owning
A co-borrower does not become a co-owner of a property. Under whose name the property is registered, it belongs to that person. It would not belong to you even if you assisted with the EMI payments.
The borrower is responsible for repaying the loan
You are responsible for paying the EMIs and the loan, whether you pay the regular EMIs or not. Even if one of the co-borrowers dies or the spouses get divorced, this would still apply.
All parties must agree to the sale
This provision complicates the process for future sales. If the property were to be sold, both borrowers must agree as long as the loan is not paid off. Once the loan is paid off, the owner of the property would be free to dispose of it in the manner they deem fit.