Tuesday, February 7, 2023

Points To Remember For Availing Home Loan After Retirement

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Having a self-owned house holds great importance in the post-retirement years. A home provides a sense of security and stability. Earlier, you might not be able to buy a house because of other financial commitments, like the education of kids and their marriage. After retirement, when almost all other financial responsibilities are complete, a senior citizen may plan to build or buy a home.

It is never too late to buy a house, and leading banks in the country help retirees purchase a house with readily available Housing Loans. A home EMI calculator tells a senior citizen borrowers in advance how much money they need to keep aside as a part of the loan repayment.

The financial conditions and age span of retirees make it important for them to consider a few points when planning to avail a Home Loan.

Points To Remember For Availing of a Home Loan After Retirement

Here are a few crucial points a retiree may consider when applying for the best Home Loans in the country:

Check the eligibility criteria

Some top banks in the country provide Home Loans to senior citizens up to the age of 65 years. For retiree Home Loan applicants, lenders may have additional eligibility criteria. It is advised to check the Home Loan eligibility criteria for senior citizens before applying for a Housing Loan. Being sure of one’s eligibility for a Home Loan helps boosts the chance of loan approval.

– Opt for a joint loan

Senior citizen can improve their chances of getting a Home Loan by adding a co-applicant who has a steady income source. A joint loan with children earning a steady income can make it easier for a retiree to get a Housing Loan. Moreover, it can help them earn tax benefits for the loan applicants too.

– Check the credit score

The credit score of a retiree is the most important checkpoint for a lender. Lenders assess the creditworthiness of a Home Loan applicant by looking at their credit score. A good credit score indicates whether the applicant can repay the loan comfortably. 

Lenders consider a credit score between 750 to 900 as extremely reliable for extending a loan offer to a retiree. A low credit score indicates the inefficiency of a borrower in repaying earlier loans. Therefore, one should check their credit score and try to improve it by reducing their outstanding debts before applying for a Home Loan (if it is low).

– Property’s Current Market Value

Home Loans are backed by an asset (property) from the borrower. Lenders are more comfortable offering secured loans as they have the option to auction the pledged asset in the case of a loan default. A senior citizen has a better chance of availing a Home Loan if the property value is high, as the compensation amount will help the lender recover the loan in case of default.

– Opt for a lower loan-to-value (LTV) ratio

The loan-to-value is the ratio of the present market value of the purchased property to the loan provided by the lender. For example, if a lender offers an Rs. 80 Lakh Housing Loan for a property valued at Rs. 1 Crore, the LTV ratio, in this case, is 80%. 

The home buyer needs to pay the remaining amount from their pocket as a down payment. A higher down payment on property results in a lower LTV and a lower loan amount. 

This way, the chances of loan approval increase and it also results in smaller EMIs (Equated monthly Instalments) for the senior citizen borrower. 

Use a home EMI calculator

Elderly people need not visit the lender’s office to know the EMI they will have to pay for a Home Loan. Use an online Home Loan EMI calculator to find out the monthly amount payable towards a Home Loan. 

Use different combinations of principal amount and loan tenure to reach a suitable EMI value.

A senior citizen retired from active service can still avail of a Home Loan to purchase a residential property by keeping in mind the points given above. Leading banks offer Home Loans starting at only 8.65% per annum to eligible Home Loan seekers.

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