When you are buying a home, lots of financial and legal responsibilities have to be taken care of in the process. To share these responsibilities, people generally go for the option of joint ownership, more often with their spouse. Overall, the idea of buying a home in a co-ownership is beneficial. But, each person will be able to avail the tax benefits only if the sources of income are distinct and authentic.
Also, if the property gets involved in any legal dispute, then every co-owner will be a part of the case. Therefore, all the situations must be thoroughly evaluated and analyzed by the homebuyers before reaching a final decision.
In case, a house comes under the joint-ownership of a husband and a wife, then issues may percolate if they decide to get a divorce. In scenarios like these, it is very important to ascertain what portion of the house will be given to whom and how will the responsibility of loan be divided.
Accountability of repayment of home loan for a property under joint-ownership
Every co-borrower has an equal responsibility towards paying the monthly installments of the home loan. Any kind of hindrance in the home loan, like death, job loss, divorce, etc. will make the other borrowers accountable to ensure that the loan is repaid on time. It doesn’t matter which co-borrower is paying how much as the financial institution is only concerned about their loan getting serviced on time.
In situations like death, dispute, divorce etc. which can result in delay of repayment of home loan, the financial institution will continue with the recovery against the other co-borrowers.
Agreement of jointly owned property in case of divorce
If a couple decides to get a divorce, both, the husband and the wife have to deal with the house and its loan in a cooperative manner. Several ways are there to settle the outstanding amount and other issues rising on the jointly owned property –
•They can sell off the property to repay the loan. And if there is any amount left, it can be divided between them.
•Ownership of the property can be taken over by one party by sorting out the contribution made by the other party. The property can be refinanced after that..
•Name of one party can be cleared from the financial institution’s account.
All the applicants are equally accountable to repay the loan in the eyes of the financial institution. Although, many situations like divorce are not planned, it is advisable for couples to consult legal experts when buying a home in joint-ownership.