Hi Saheel, you are talking of co-applicant. Yes, you can and must apply for a loan with your wife as a co-applicant. Two advantages :
1. Banks will allow you an interest reduction of 0.05% if you wife is the co-applicant (some scheme to encourage women borrowers).
2. Both you and your wife will get tax benefit (interest component of upto Rs. 2L annually) - this will reduce your tax outgo.
3. As you rightly pointed out, your overall loan eligibility amount increases.
4. In these times of feminism and political correctness, you will be making a statement with your wife as the co-owner ;)
But seriously, points 1 ,2 and 3 above are clear reasons for making your wife a co-applicant. Hope this answer helps.