Benefits of Taking a Home Loan Solo and Being the Sole Owner of the Property
May 25, 2017 Home Loan
From all the research and doing groundwork on taking a home loan for the property, it is more advisable to own a property jointly with your spouse. In that way, both the co-owners enjoy the tax benefits and have a higher margin for taking the home loan. Also, women have to pay lesser stamp duties as compared to male buyers. All these benefits can make anyone take a joint home loan.
But have you ever considered the benefits of taking a home loan solo? It has its own advantages.
1. Sole owner has the responsibility to himself:
Having someone helping you if you fail to make the payment of the loan is a great idea. In joint loans, if one borrower fails to make the payment, then the other one can make it without any issue. But as a sole owner, you have the responsibility to yourself. And anyone who has taken a huge loan can pay off the debt by himself.
2. Credit ratings:
When you borrow the loan by yourself, your credit rating is impacted by your own performance and not your partners. If your credit score is poor because of your partner, which might happen in case of a joint home loan, then the lenders may hesitate to give you next loan because of your poor credit rating.
3. No property related trouble in future:
If there’s any trouble with you and your partner in future, then there won’t be any trouble related to property in that case. When you are the sole owner you are free to do what you want to do with your property while making payments yourself.
4. Free to handle the property:
If in future you want to sell the property but the co-borrower does not, then it might be an issue. As a sole owner, you are free to sell the property as it suits you.
5. No pre-emption:
The co-owner of the property enjoys the right of pre-emption. If in future you want to sell your share of the property, you will first have to offer it to the co-owner. It is only after if the co-owner refuses to buy it, you can sell it to the third party.
Things to remember:
But have you ever considered the benefits of taking a home loan solo? It has its own advantages.
1. Sole owner has the responsibility to himself:
Having someone helping you if you fail to make the payment of the loan is a great idea. In joint loans, if one borrower fails to make the payment, then the other one can make it without any issue. But as a sole owner, you have the responsibility to yourself. And anyone who has taken a huge loan can pay off the debt by himself.
2. Credit ratings:
When you borrow the loan by yourself, your credit rating is impacted by your own performance and not your partners. If your credit score is poor because of your partner, which might happen in case of a joint home loan, then the lenders may hesitate to give you next loan because of your poor credit rating.
3. No property related trouble in future:
If there’s any trouble with you and your partner in future, then there won’t be any trouble related to property in that case. When you are the sole owner you are free to do what you want to do with your property while making payments yourself.
4. Free to handle the property:
If in future you want to sell the property but the co-borrower does not, then it might be an issue. As a sole owner, you are free to sell the property as it suits you.
5. No pre-emption:
The co-owner of the property enjoys the right of pre-emption. If in future you want to sell your share of the property, you will first have to offer it to the co-owner. It is only after if the co-owner refuses to buy it, you can sell it to the third party.
Things to remember:
- Co-owner is always a co-borrower while a co-borrower might not be the co-owner. To enjoy the tax benefit, co-owners need to be co-borrowers.
- Mention it in the sales deed that if there is any conflict in future, you would like to go for the arbitration.
- Sales deed must mention the rights, responsibilities and shares of the co-owners.
- In India, wife gets half of the share of the property brought by her husband after the marriage, in case they divorce.
- In case of any unfortunate event, the co-owner who is not working will have to pay the loan taken by you which might fall upon them as a burden.
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