Shared Mortgages: Enjoying Advantages Yet Facing Obstacles

In today's economy, buying a house is a significant milestone for many families, often requiring joint efforts and financial planning. This article aims to shed light on the intricacies of joint home loans, term insurance, and the associated tax benefits.

Firstly, it's essential to understand that joint home loans are common among spouses, but they can also be taken by other family members. This shared responsibility not only pools resources but also offers higher loan eligibility and better interest rates.

Term insurance, a crucial part of financial planning, especially after joining the workforce and after marriage, plays a vital role in this scenario. Ideally, both spouses should have separate term insurance policies, including riders for critical illnesses, to ensure financial protection in case of unexpected events.

In the event of a critical illness diagnosis, a term insurance policy can provide a payout to help the surviving spouse repay the debt or cover the ill co-applicant's portion. Similarly, in the unfortunate event of one spouse's demise, the regular term insurance payment can provide much-needed financial support.

Interestingly, some insurance companies allow the surviving spouse to continue with the reduced term insurance cover after a payout, offering a degree of financial security.

When it comes to tax benefits, both spouses can avail deductions under section 24(b) of the Income Tax Act, on interest paid, up to ₹2 lakh per annum each. Additionally, under section 80C, the home loan principal is also allowed as a deduction, with a maximum amount of ₹1.5 lakh a year. However, it's important to note that these deductions are not available to those opting for the new tax regime.

Home loan interest and principal can also reduce taxable income for those on the old tax regime, further enhancing the financial advantages of joint home loans.

In the post-Covid period, there has been a surge in the preference for larger houses with amenities. This trend, coupled with the benefits of joint home loans, makes it an attractive option for many families.

However, when it comes to niche products like term insurance specifically for joint home loans, publicly available information is limited. Major insurers like LIC, HDFC Life, ICICI Prudential, and SBI Life offer term insurance policies linked with home loans, but the availability of partial payout features in joint loan contexts would require direct inquiry with these companies or specialized financial advisors.

Lastly, in the event of a divorce, co-applicant spouses have three options to handle a joint home loan: one spouse can buy out the other, sell the property, or rent out the property and share the income.

This article serves as a starting point for understanding the complexities of joint home loans, term insurance, and tax benefits. For more detailed information, it is always advisable to consult with a financial advisor.

Published on August 30, 2025.