When you avail a loan against your property, there are two main factors that determine your eligibility:
a) Your income
b) Value of your property
For instance, if according to your property you are eligible for 60 lakhs and according to your income you can avail only 30 lakhs, however your required loan amount is 45 lakhs. Then in such a situation you may get a co-applicant on board your loan application. So that, both your incomes may be considered together to increase the overall loan eligibility. Here are some key points to be kept in mind when you are looking for a co-applicant for your loan:
In some cases, the co-applicants are mandatory depending on their relationship to the property or the applicant, here are some examples:
- All co-owners of the property (which you provide as collateral). It is not mandatory to consider their income, unless you want to increase the loan amount you are eligible for.
- However, it is not compulsory for co-applicants to be the co-owners of the property in question.
- For a partnership firm, the key partner.
- For a company, individuals who own more than 76% of shares.
- If a company or a partnership is going to be offered as collateral, then all the directors / partners need to act as co-applicants.
- In case of a joint family’s income being considered, then the head of the joint family i.e. Kartha must be a co-applicant.
- The minimum age of the secondary applicant must be at least 23 years and a maximum of 60 years if the income is going to be considered.
- If the income of the co-applicant is not going to be considered, then the minimum and maximum ages are 18 and 80 respectively.
Depending on the bank where you have applied, the specific conditions for each application may vary, but here are some common examples of who can be a co-applicant:
1) Co-owners of the property
2) Spouse of applicant
3) Brothers (both primary and secondary applicant must be brothers)
4) Son and father
5) Son and mother
6) Unmarried daughter and parents
In some banks, even members of the in-law’s family can be a co-applicant.
One of the frequently asked questions is why can’t a daughter and a parent together apply for a loan against property?
The main reason being: once a daughter is married, legally she belongs to a different family, and there is a greater chance of disputes being raised. Unless the property is in the name of the daughter, it is not advisable for the daughter to jointly apply with her parents.
Note – the term co-applicant and secondary applicant mean the same.