Co-applicant for a bank loan
RC Gayatri
(Querist) 23 April 2013
This query is : Resolved
Dear Sir,
I am a bachelor and I lost my parents. Now I am planning to purchase a home by taking housing loan.
But Bank agent is insisting for a Co Applicant whereas I don't have any.
1) Is it really mandatory as per the rules to have a co applicant for a housing loan ?
2) if its mandatory to have a co applicant for a housing loan then can I use any of my friends or colleagues ?
3) If I use any of my friends or colleagues as co applicants then, are they going to become legal heirs of my property by default in-case anything happens to me ?
I request you to please answer all 3 questions of mine.
ajay sethi
(Expert) 23 April 2013
not necessary to have co applicant . inform the agemnt that there are a number of banks willing to give loans . insist that you dont want a co applicant
under no circumstances use any friend or colleague .
if there are 2 applicants for loan and property is purhcased in joint names then the friend would be co owner of flat
RC Gayatri
(Querist) 23 April 2013
Ajay Sethi Sir,
So Is it Mandatory for the co applicant to be a co holder of the flat ?
lets say if I keep my friend as a co applicant , will he become a co owner by default ?????? Is it mandatory to have my friend as co owner while getting property registered on my name ???
ajay sethi
(Expert) 23 April 2013
no it is not mandatory to have co applicant of loan as co owner . what would be the bank stand ?
RC Gayatri
(Querist) 23 April 2013
Bank person did not discussed this with me. I dont want to have coapplicant as co owner. I will discuss and argue with him on this. How can one make it mandatory for the coapplicant to be a co owner.
ajay sethi
(Expert) 23 April 2013
Who can be a co-applicant for home loan?
Ashish Gupta, ET Bureau May 9, 2010, 04.59am IST
A co-applicant is one who applies along with the borrower for a loan. A borrower has the option of having a co-applicant to a loan along with himself. The coapplicant cannot be a minor. Most banks permit a few specified relations who can be coapplicants - brothers, parent and son, husband and wife.
In contrast, a co-owner includes all the owners of a property. Banks insist that all co-owners be co-applicants necessarily . Again, a minor is not allowed to be a co-owner as legally a minor cannot enter into a contract. Consequently, all co-applicants are not coowners but all co-owners have to necessarily be co-applicants .
Two or more persons can jointly apply for a housing loan subject to certain conditions. In the present day, when the cost of living is going up and usually both spouses work, having co-applicant becomes more of a necessity than a requirement. There is no legal requirement to have a co-applicant .
However, in order to enhance the loan eligibility, a borrower has an option to resort to by having a co-applicant . This way, the total eligible income for the purpose of computing the housing loan increases, thereby resulting in higher loan eligibility.
However, only in certain cases of acceptable relationships , as stipulated by the bank, the income of the coapplicant can be included in arriving at loan eligibility of the borrower. Other relatives cannot be co-applicants nor can their income be included to compute loan eligibility.
Normally, a bank does not permit friends or relatives who are not blood relatives to take a loan jointly. Only if the coapplicant receives income from a regular source will that income be considered for determining the loan eligibility.
The owner of the property should always be the main applicant. A person can jointly apply with his spouse. The property may be in the name of any one of the two. The person whose income is considered for the loan need not necessarily be the owner of the property.
In case of parents and children , these rules will apply:
Father and son
In case of a father and son, if the applicant is the only son, he can jointly apply with his father with both the incomes being considered. The property should be in their names jointly and it does not matter who the main owner is. This is because in any case the son is the legal heir of the father's property.
Father and sons
In case a person has two or more sons and if he wants to apply jointly with one of them, he should not be the main owner of the property. This is because, on his death, his children should inherit the property jointly and may cause an inheritance dispute.
The father may only be taken as co-applicant and his income may be considered for the loan. He may be a co-owner or not own the property at all. Under no condition should he be the main owner of the property.
Unmarried daughter and father
An unmarried daughter can apply jointly with their father. However, the property should only be in the name of the daughter and the income of the father should not be considered . This is to avoid any legal complications on the subsequent marriage of the applicant .
Where applicant is the owner and has a son and a daughter, an affidavit may be obtained from the daughter that she has no claim on the property.
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Raj Kumar Makkad
(Expert) 23 April 2013
1. No.
2. Yes, but this is not mandatory.
3. No. In that event, you share can be got auctioned.
This is not mandatory and if a particular bank insists for it, do contact with other.
R.K Nanda
(Expert) 23 April 2013
no more to add.
