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 co-applicant cannot be a minor. Most banks permit a few specified relations who can be co-applicants - 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 co-owners 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 co-applicant 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 co-applicant 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.
Brothers and sisters
An applicant may apply with his brother provided they are currently staying together, and intend to do so in the new property as well.
However, a brother cannot apply with his sister. Also, an applicant cannot have her sister as a co-applicant. Further, a minor child cannot be a co-applicant with the parent in any case.
