Buying their dream house is every family’s most important financial decision and by far the single-most expensive asset they would own.
When both spouses in a family work, there is the inclination towards sharing the debt burden, often equally.
Joint home loans are thus common when making the decision of buying a house. Of course, joint home loans can also be taken by parent-child and siblings combinations. However, the most common joint loan applications are from spouses – husband and wife.
There are many benefits of applying jointly for a home loan. These include higher loan eligibility, better interest rates and tax benefits for both spouses.
While there are many positive aspects of taking a home loan jointly, some difficult situations could arise.
A divorce, one of the spouses falling critically ill and in the unfortunate event of the death of a co-applicant can all derail well-laid-out plans.
We discuss both the benefits and the challenging scenarios – with ways to work around them – for borrowers to make an informed call.
Joint gains
In the post-Covid period, there has been a surge in the preference for larger houses and apartments that offer many conveniences and amenities.
As a single borrower, it may be difficult to secure a loan for very large amounts. With your working spouse as a co-applicant, you can bolster your case for a larger loan.
If, for example, both spouses earn somewhat similar salaries, there is a chance to double your loan amount eligibility.
Making a joint application also means that both your scores are taken into account for loan disbursal.
If the scores are good for both applicants – say 800 or more – then the chances for negotiating for lower interest rates improve.
Besides, having a woman co-applicant gives a reduction in interest rates of 5-10 basis points.
Some States/Union Territories such as Karnataka, Uttar Pradesh, Haryana, Maharashtra and Delhi also have lower stamp duty to the tune of 1-2 percentage points in case women happen to be owners/joint owners of a property.
Finally, there are also tax benefits available.
For those buyers still on the old tax regime with deduction benefits, home loan interest and principal can reduce your taxable income.
Under section 24(b) of the income tax act, both the spouses can avail a deduction on interest paid of up to ₹2 lakh per annum each. This is especially useful in the initial years of the home loan repayment as you pay more interest than principal in those periods.
The home loan principal is also allowed as deduction under section 80C, which has several other options as well – life insurance premium, EPF, PPF, five-year bank deposit etc. The maximum amount of deduction that can be availed is ₹1.5 lakh a year.
These deductions are not available to those opting for the new tax regime. Though tax benefits should not dictate your home-buying decision, it is nonetheless a minor incentive.
Curveballs, rough tides
When all goes well, sharing the financial commitment with your spouse can be a fulfilling experience.
However, there are life’s unknowns to contend with.
Now, what if the going is not great between spouses and they decide to part ways? The joint home loan still remains to be paid.
The lender makes it clear even during the loan sanctioning stage that repayment of all outstanding dues is mandatory and that each of the co-applicants is responsible for clearing the debt.
We are not considering the alimony angle here as that would bring too many scenarios and possibilities.
Now, in the normal course, there are three options available for co-applicant spouses when there is a divorce and a loan to service.
First, one of the spouses can buy out the other, and take the full share of the house while continuing to singularly service the loan. This means making a settlement payment on mutually agreeable terms, taking into account the market value of the property. This requires a lump sum to be at their disposal, and so the higher earning (and saving) spouse can payoff the other co-applicant and take full procession while continuing to service the loan.
Second, the property may be sold and the loan paid off to the lender from the proceeds of the sale.
The third option is to rent out the property and share the amount based on mutually agreeable terms while continuing the loan repayment schedule.
Then there are more difficult and unfortunate situations.
What if one of the spouses is diagnosed with some critical illness? Obviously, the spouse suffering from the illness would also not be in a position to work and earn a salary. The loan obligation still remains.
That’s where term insurance becomes very important as a part of financial planning.
Within a few years of joining the workforce and certainly after your marriage, taking a term insurance is critical. Both spouses must ideally have a separate term insurance policy for themselves with some riders such as for critical illnesses, especially if there is a family history of such diseases.
As soon as the critical illness is diagnosed, the insurance company would make a payout that would help the surviving spouse in repaying the debt or at least the portion of the ill co-applicant.
Finally, there may be cases of unfortunate death of one of the spouses due to an accident, disease etc.
Now, the regular term insurance payment would help in such cases.
Additionally, there are separate term covers exclusively for home loans that come for joint applicants as well.
If you take a joint term insurance cover with your spouse, and face an unfortunate event, the insurer will pay the portion attributable to you. While many insurance companies close the joint term insurance policy after a payout, some allow the surviving spouse to continue with the cover with a reduced amount (sum insured).
Ideally, both the loan applicants must have separate term covers. The term cover exclusively for the home loan can be taken at the time of applying for the debt.
Published on August 30, 2025
