Until about 10-12 years ago, buying a home in your name was considered to be a prestigious move that was also indicative of your position on the social ladder. The typical buyer would be in his (yes, mostly male) 40’s, earning a six figure salary, living with a wife and kids in a not-so-bad rented apartment. Today, this profile has faded to include younger couples in their 30s, both working, along with the emergence of the sole owner, both male and female. High incomes, easy access, technological advancements and a range of finance options have all contributed to progressively younger homeowners who aspire to own a property either jointly or on their own.
There are multiple benefits of owning property together, either with the spouse or some other family member or friend. Yet, these days we see more single owners of properties. Sole ownership occurs when someone owns a complete interest in property. Sole ownership also has its set of advantages as well as disadvantages. Let’s take a look:
Flexibility with loans
Buying a home these days comes with the attendant financial liability. Knowing that you and only you are responsible for making these payments is sometimes a relief as you are not dependent on someone else to make the payment. Or worry about defaults because your co-owner is not prompt with payments.
Credit rating is all yours
When you are going solo, your credit rating is in your hands. You can ensure a solid credit rating as the payments are completely in your hands. With a co-owner, your credit rating performance is affected by his or her payment history as well. This will hamper you in the future if you intend to take on further loans.
Free from disputes
Sole ownership is simply less complicated. Property in your name gives you the sole discretion over when to sell the property, what to do with the property, and how to leave the property to another. With the absence of another owner, there is also the absence of arguments and disputes arising from indecision about the property’s future. Would you want to sell it? Write it off to children or relatives? Rent it? The decision is all yours.
Excluded from the law of pre-emption
The law of pre-emption states that if you want to sell your share of the property that you jointly own with someone, then you will have to check with the co-owner first. Only if the co-owner is disinterested in buying can you go ahead and put it up in the property market. Being a single owner eliminates these complications of pre-emption.
Limited financial capital
A joint ownership means a larger pool of money, and that means a larger house. Having limited financial resources mean that unless you rise to an enviable position in your career at a young age, it is difficult to afford a sizeable house that can comfortably accommodate a family.
Lack of tax rebates
Taking a joint home loan enables you to avail of tax deductions under the Income Tax Act while some states offer 1 to 2% rebate on stamp duty.
Reduced financial credibility
Joint home loans have lesser reasons to get rejected. Banks feel more secure in the fact that each party acts as a guarantor for the other and hence like a safety net for the bank in case of defaults.
Both joint ownership and sole ownership have their advantages and disadvantages. At the end of the day, it’s best to rely on your research as well as personal requirements and comfort to choose the best way to own your home.