Are you 50 and still looking to avail a home loan? Lenders consider several important factors while sanctioning not only home loans, but also other loans. Age is a primary consideration. The older you are, the shorter the home loan term offered by banks and vice versa.
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Let’s say you are availing a home loan at 30. You have 28 years to repay the loan if the retirement age is 58 years. At 50, you get just 8 years. It does not mean that the people above 50 are not eligible for a home loan. Lenders are not allowed to discriminate between home loan borrowers on age, but they must ensure you satisfy the normal lending criteria.
In India, availing home loans is much easier than other countries, as the banks allow you to repay loans up to 70 years. Banks have no problem sanctioning home loans, as the house serves as collateral. This may be for the purpose of buying or constructing a house. However, many lenders have a maximum limit on how much home loan amount they are willing to sanction. The maximum loan amount that can be sanctioned is approximately Rs 15 Lakhs for repairing or renovating the house.
Some banks sanction a loan of around Rs 2 Lakh to Rs 20 Lakh, to purchase a new property. Certain public sector banks also encourage senior citizens to avail home loans. It means that people above 50 are not too old to seek a home loan.
Before you apply for a home loan, make sure you do not have any dues. If you have lots of debts to repay, banks may sometimes reject the home loan application.
See Also: Tips For Home Loan EMI Repayment
Define your exit strategy, which is extremely crucial. An exit strategy clearly describes what would happen to the home loan after retirement. In addition to the normal requirements, you must demonstrate how you would continue paying home loan EMIs even after retirement. For instance, you could manage the home loan EMIs by selling a property. Put simply, banks would like to see some income, before sanctioning the home loan, especially at an older age. A property would do just fine. The strategy may also involve explaining when you plan to shift from a full-time job to a part-time job.
Banks will accept exit strategies that reduce the tenure of the home loan. Do not avail a loan if your exit strategy is not accepted. This is applicable to both salaried and self-employed professionals. If you are a businessman, you may still earn after retirement. Professionals and highly experienced loan brokers can help home loan seekers, draft this strategy. Not all banks in India expect home loan borrowers to submit an exit strategy.
Make high down payments when applying for home loans after 50. At 50, it is presumed that the home loan applicant has accumulated a good amount of wealth and savings. The applicant may use these savings to reduce the home loan burden. Compare the returns earned on your current investments, with the interest paid on the home loan before coming to a decision. Consider the tax benefits received from the home loan. At the age of 50, NBFCs and banks may be reluctant to offer home loans. It is very important to make a comparison and do your research, before applying for the home loan.
See Also: Home Loan Interest Rates Rising
The financial capacity to repay the home loan is inversely proportional to the age of the loan applicant. So, adding a co-applicant is a good idea as you grow older. Who is a co-applicant? A co-applicant is equally liable to repay the home loan. As per banking rules, a co-applicant has to be a blood relative or an immediate family member of the main applicant. Loan seekers are allowed to add up to 6 co-applicants while purchasing a property. If the co-applicant has a good credit score, the primary borrower is entitled to enjoy lower interest and tax benefits. The success rate of getting home loans sanctioned is also higher in this case.
You can avail a home loan even at 50. You can still get a better deal if you can understand the basics and eligibility criteria outlined in this article.
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