Know Who Can be a Co-Applicant for a Loan Against Property!

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A loan against property comes as a rescue when you need funds to cover your big-ticket expenses. It is an excellent financial source that allows you to use the value locked in your property. You can put your existing property as collateral and get a percentage of its value as a loan. However, a LAP loan is a big-size debt that lasts for several years. For most borrowers, it is not a wise decision to take such a Co-Applicant single-handedly. It is pretty challenging to meet all the lender’s criteria alone – be it loan against property eligibility, income, loan amount, and tenure.

Adding a co-applicant is a straightforward solution that helps applicants grab a loan against property without the hassle of managing it single-handedly. Below you will know who is a co-applicant and who can be your co-applicant for a LAP loan.

Who is a Co-Applicant?

A loan co-applicant is an individual who applies for a loan along with the main applicant as a borrower. Although applying for a loan with a co-applicant is not mandatory, it certainly improves your chances of getting loan approval. When you apply for a LAP loan with a co-applicant, both applicants’ income and other eligibility conditions are taken into consideration. 

Since both applicants’ income and credit score are clubbed together, you become eligible for a higher loan amount. At the same time, both the co-applicants also share the responsibility of repaying the loan. If the principal borrower fails to repay the loan, the co-applicant will be answerable to the lender.

Who Can Be Your Co-Applicant?

A loan co-applicant is a person who shares the responsibility of applying and repaying the loan. Most lenders require your co-applicant to be your blood relative or an immediate family member. Do not confuse a co-applicant with a co-owner since the co-applicant does not necessarily need to share the property’s ownership. However, they are accountable for any issues regarding the loan. 

Typically, the below-mentioned relations are ideal for loan co-application:

●       Spouse: Co-applying for a loan with your spouse is the most acceptable combination. You may co-own the property with your spouse, and the lender will consider both your incomes while calculating your eligibility. As a couple, you may split EMI repayments as convenient to you.

●       Father and Son: This is an ideal combination, especially when the co-applying son is the parent’s only son. The lender will consider the incomes of both the father and the son while scanning through the loan against property documents required. If the father and the son co-own the property, any party can be named the principal applicant in the loan application. However, if more than one son, the father cannot be called the main applicant. This is done to avoid any inheritance-related issues after the father’s demise. 

●       Father or Mother and Unmarried Daughter: If an unmarried daughter co-applies for a loan against property with her father or mother, the daughter must be the principal applicant. This is to avoid any legal disputes after the daughter’s marriage.

●       Brothers: Two brothers can co-apply for a loan against property, provided that they co-own the property as well.

Mandatory Co-Applicants

In some instances, applying with a co-applicant becomes mandatory, depending on the property ownership and relationship. Here are a few examples:

  1. In the case of co-owned property, all the co-owners should co-apply for a loan against the property.
  2. In the case of a partnership firm, the key partner must be the co-applicant.
  3. So, in the case of a company, the individual with more than 76% of the shares should be the co-applicant.
  4. In the case of a partnership or company, all the partners and directors should be co-applicants.

Unacceptable Combinations

Now that you know who can be the co-applicants in a loan against property, let’s look at some unacceptable combinations. These include two sisters, brothers and sisters, father or mother and a married daughter, couples in a live-in relationship, cousins, and friends. After marriage, the daughter belongs to another family, and there might be disputes. Therefore, many lenders do not allow a daughter to co-apply for a loan with her parents. However, check your lender’s conditions before making a decision.

Having a co-applicant improves your loan against property eligibility and takes the pressure off of the repayment. You also gain several other benefits, like a better approval rate, higher loan amount, and reduced interest rates. If you wish to change your co-applicant at any point of the loan tenure, you may do so. Get in touch with a lender offering LAP loans, ask for a loan offer, and follow their guidelines regarding loan against property documents required and other terms and conditions.

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