When one is looking for or applying for a Home Loan there’s often confusion between the two types of loan association: Co-applicant & Co-signer. And it is very important to understand the difference between both these terms when applying for a loan. Considering the loan amount, tenure and interest rate it may not be possible for one person to manage the loan repayment alone.
If you are a Co-applicant or Co-signer or you want to make someone your Co-applicant or Co-signer in a Home Loan. You should know the below difference:
- To start with a co-applicant is the one who applies with the primary borrower for the Home Loan and agrees to share the EMIs with the primary borrower in order to lower the Home Loan burden. Whereas a co-signer is the one who needs to pay only when the Home Loan primary borrower is unable to make the loan repayment.
- By adding a co-applicant at the time of a Home Loan application helps to increase your eligibility criteria for a higher loan amount. If only a primary borrower applies for a loan and the credit rating is low the borrower becomes less eligible for the loan. Here the role of a co-signer comes into the picture; if the individual has a high credit rating and a good income, he/she can make you eligible for the Home Loan.
- In most cases, while applying for a Home Loan, the co-applicant is most often a spouse.
- Another thing to take a note of is that if a co-applicant is also the co-owner (having a legal share) of the property then the individual is eligible to avail tax benefits.
- Due to an improved credit score of the co-signer’s profile, a primary borrower can avail loans at a better interest rate. However, a co-signer is not responsible for paying your EMIs; the primary borrower will be liable for the repayment of the loan, in case of a default on your part. A co-signer for a house can be a friend or family member, with a good credit history and a solid income.
While applying for a Home Loan in association (Co-applicant or Co-signer) you need to be careful who you’re choosing for this joint loan. Once you select an option that is best for you, you can go ahead with the Home Loan.
You can choose from various Home Loan schemes from Fedfina to apply with a co-applicant or co-signer.