Housing loan dilemma

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 May 2012 I am going to take Housing Loan on behalf of my Jijaji as he has not sufficient documents to provide Banks to get loan.

Here my dilemma is that, what documents or legal processes I need to follow so I will be in safe place and my future loans eligibility should remain same.

I do not want to take Housing loan benefits so what documents I need to collect from my Jijaji.

My Jijai is going to pay margin loan money as well as future EMI.

Amol S Joglekar

Amol S Joglekar (Expert)
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03 May 2012 No room for any such BENAMI transaction in income tax. (Abolished long back) So take the loan, flat will be in your name (has to be), take the interest benefit. Hope for the best of your Jija that by the time your turn comes he will be equipped with documents.

Mihir Doshi

Mihir Doshi (Expert)
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03 May 2012 Dear,

You will get loan when the documents are in your name.

So, you will be owner of the house and you can claim the tax benefit as well.

Your Jijagi wont be able to claim any benefits.

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Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2012 Thanks all of you for your valuable advise.

They don't have house so I have to help them to sort out this otherwise they will pay rent amount which is very much equal to the future EMI.

Actually I am not much interested to take tax benefits from this housing loan and I want to keep my loan eligibility intact.

Is there any chance whether we can have some sort of legal document which mention that my Jijai will give me the cash/cheque to pay the EMI and I can show the same when I will go for another loan.

I really appreciate your advise.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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28 July 2024 Navigating a housing loan where you are acting as a co-borrower for someone else, especially when you do not intend to take any tax benefits or impact your future loan eligibility, requires careful planning and legal documentation. Here’s a guide to help you manage this situation:

### 1. **Documentation and Legal Safeguards**

**A. Loan Agreement and Co-Borrower Role**

1. **Loan Agreement**: Ensure that the loan agreement clearly specifies your role as a co-borrower. This means you are responsible for the loan, but you can specify that the EMI payments will be handled by your Jijaji.

2. **Consent Letter**: Obtain a formal consent letter from your Jijaji stating that they will be making the EMI payments. This letter should specify that they will be paying the EMI and that you are only acting as a co-borrower to help secure the loan. Have this letter notarized to add an extra layer of legal validity.

3. **Indemnity Bond**: Draft an indemnity bond where your Jijaji agrees to cover the EMI payments and any other liabilities related to the loan. This bond should also specify that you are not the actual borrower responsible for the EMI payments.

4. **Affidavit**: Consider having your Jijaji sign an affidavit affirming that they are responsible for the EMI payments and that you are merely facilitating the loan process. This document should be executed in the presence of a notary public.

**B. Bank Documentation**

1. **Addendum to Loan Documents**: If possible, include an addendum to the loan documents where the bank acknowledges that your Jijaji will be responsible for the EMI payments. While banks may not always agree to this, it’s worth discussing.

2. **Loan Disbursement and EMI Payments**: Ensure that the loan disbursement and EMI payments are handled according to the plan you’ve outlined. If the EMI payments are made from your Jijaji's account, it is essential to keep records of these payments.

### 2. **Maintaining Future Loan Eligibility**

**A. Credit Report Monitoring**

1. **Check Credit Report**: Regularly monitor your credit report to ensure that the loan is reported correctly and that there are no discrepancies regarding payment responsibility. This can be done through credit monitoring services or directly from credit bureaus.

2. **Ensure Timely Payments**: Verify that your Jijaji makes all EMI payments on time. Any delays or defaults might affect your credit score and future loan eligibility.

**B. Documentation for Future Loans**

1. **Documentation of EMI Payments**: Keep detailed records of all payments made by your Jijaji. This documentation can help prove that you are not responsible for the EMI payments in case of future loan applications.

2. **Letter from Jijaji**: Obtain a formal letter from your Jijaji stating their responsibility for the loan payments and that you are not benefiting from the tax deductions or other benefits of the loan.

**C. Future Loan Applications**

1. **Declare the Co-Borrower Status**: When applying for future loans, declare your status as a co-borrower on the previous loan. Provide all supporting documents showing that you do not handle the EMI payments and that the payments are managed by your Jijaji.

2. **Consult with Bank**: When applying for a new loan, consult with your bank about the impact of the existing loan on your eligibility. Explain the situation and provide all necessary documentation to demonstrate that you are not the actual EMI payer.

### 3. **Consult Professionals**

- **Legal Advisor**: Engage a legal advisor to draft and review all documents, including consent letters, indemnity bonds, and affidavits. They can ensure that all documents are legally binding and properly executed.

- **Tax Advisor**: Even though you don’t intend to claim tax benefits, consulting a tax advisor can help clarify any potential tax implications and ensure compliance with tax laws.

By taking these steps, you can protect yourself legally and ensure that your role in the housing loan does not affect your future loan eligibility.