A co-applicant is a person who applies for a loan along with the borrower. A borrower has the option of having a co-applicant to the loan along with himself. The co-applicant cannot be a minor. Most banks permit a few specified relations to be co-applicants – brothers, parent and son, and husband and wife, are some such.
In contrast, a co-owner means and includes all the owners of the property. All banks insist that all co-owners have to be co-applicants necessarily. Again, a minor is not allowed to be a co-owner, as legally, a minor cannot enter into a contract. As such, all co-applicants are not co-owners, but all co-owners are necessarily co-applicants.
Two or more persons can jointly apply for a housing loan subject to certain conditions. In the present day circumstances, when the cost of living is going up and usually both the members of a family are working, having a co-applicant becomes more of a necessity than a requirement. There is no legal requirement to have a co-applicant. Nor do banks insist on having a co-applicant while applying for a housing loan (except in certain circumstances).
However, in order to enhance the loan eligibility, a borrower has the option of having a co-applicant. This way, the total eligible income for computing the loan eligibility increases.
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 incomes be included to compute loan eligibility. Normally banks do not permit friends, or relatives who are not blood relatives, to avail a home loan jointly. Only if the co-applicant receives an income from a regular source, will that income can 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 father and son, if the person is the only son then 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.
In case a person has two or more sons, and 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 the co-owner or not own the property at all.
Unmarried daughters can apply jointly with their father. However, the property should be in the name of the daughter only. Unmarried daughters can apply jointly with their mother too. However, again, the property should be in the name of the daughter only. This is to avoid any legal complications on the subsequent marriage of the applicant.
Where an 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.
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, a sister cannot have her sister as the co-applicant. Further, as already mentioned, a minor child cannot be a co-applicant with the parent.