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September 16, 2021Home Loan: Know The Difference Between A Co-signer And A Co-applicant. Have you been planning on purchasing a home loan? If yes, you should know that you can apply for a home loan online in various forms such as a co-applicant, co-borrower, co-owner, or co-signer.
Doing your research well before putting your name on the home loan is essential. As each of them has different legal and financial obligations, it is important to understand their differences in detail and then choose.
Taking this headache away from you, here is a detailed difference between a co-signer and a co-applicant. But, before that, let’s understand the need to apply for a home loan.
Home Loan: Know The Difference Between A Co-signer And A Co-applicant
Why Apply For a Home Loan?
Everyone dreams of a home, but not everyone can afford to fulfill this dream due to lacking finances. By applying for a home loan, you can get the financial support to fulfill your family’s dream as well as your own. Apply for a home loan online in an instant. You can pay the loan amount through EMI to the lender and avail of your dream home or property.
Co-applicant Of A Home Loan:
A person who joins the primary borrower in the application process for a single loan is a co-applicant. The co-applicant is also responsible for paying EMIs on home loans along with the primary borrower. The chances of meeting the eligibility criteria and the loan getting approved are higher when applying with a co-applicant.
Some banks insist that all co-owners should be co-applicants; the reverse is not necessary. If a co-applicant is not a co-owner and fails to repay the loan,
they will no longer have rights over the property. Moreover, a co-applicant who is not a co-owner cannot qualify for the tax benefits, whereas the primary owner can.
Why Apply With A Co-applicant?
A borrower can apply for a home loan online with a co-applicant to help them with the loan. The co-applicant can be a family member or a friend of the primary borrower willing to help with funds. The credit scores and profiles of both parties are reviewed before the loan gets approved. Based on this, the co-applicant will be able to help the primary borrower with the loan.
Co-singer Of A Home Loan:
Unlike a co-applicant, a co-signer only needs to pay the home loan when the primary borrower lacks a good credit rating. A co-signer is not responsible for the EMI payments or has any interest in the property. But, a co-signer is equally responsible for the loan repayment if the primary borrower is at default in making the payment.
The presence of a co-signer can increase the eligibility criteria of a home loan for the borrower. Not just that, but the borrower can receive more favorable terms and conditions with the loan.
A co-signer, just like the co-applicant, will not enjoy the tax benefits on the home loan repayments. Along with this, they will also not have any right over the loan amount or the property. Being a co-signer can ruin the future credit score and eligibility as the loan will not include the credit record.
Why Apply With A Co-signer?
A co-signer makes use of his credit rating so that you can secure your loan. This is the biggest benefit of having a co-signer as a borrower. If the lender sees the borrower as a risk, the co-signer assures the lender that the loan will be repaid. This benefits both the borrower and the lender. If the borrower has no credit rating, the lender will not be willing to provide a loan. Here, the credit rating of the co-signer will save the borrower and assure a loan.
Final Thoughts:
As a primary borrower, you need to be wise when choosing a co-signer or a co-applicant. You need to understand both these applicants in detail and then choose the best option for you.
