Thelife
Shivanand Shetty had everything planned for him. At 42, this healthy, dynamic, hardworking executive wanted to buy his dream house and raise his two young boys in a safe and upscale neighbourhood. But, soon he realized that it wasn’t that easy. The only thing playing spoilsport for him was his age.
Bankers don’t consider giving loans at this age easily because it has direct impacts on the tenure and EMI. For some, interest rates are a governing factor and for others, tenure is equally important when it comes to repayment. A longer tenure would mean lower EMIs and a comfortable period to repay, while shorter tenure could increase the load on the EMI but carry lesser interest overall.
So, for most of the banks, the minimum age for loan application is generally around 23-24 years. Since home loans are a long term commitment of around 20-25 years, the risk involved with the repayment capability of those above 40, makes it more difficult for lending institutions to approve and process.
The eligibility for home loans is usually calculated on income and number of years left for retirement. And in India, retirement age is considered to be 60 years for salaried individuals and 65 years for self-employed individuals.
Hence, a young employee in his late 20s will find it easier to procure a bigger home loan than someone at 40 and above. Here are four measures, with which one can get a home alone at even 40.
1. Zero loans and a stellar credit report: Make sure you pay off all existing loans and have zero financial burdens on your account. A good credit history is possibly your best bet to avail a loan. So, make sure all those insurance premiums and credit card bills are paid on time. It may also help to get a copy of your credit report from CIBIL at a small fee and carry it along with other documents to the bank.
2. Opt for a joint loan: Having a co-borrower like spouse, son or daughter, who reflect a steady source of income, can help during filing a loan application. Financial institutions take into account the distribution of risk, thus making you a more reliable candidate. Apart from this, joint loans can also help in tax saving.
3. Pension, PF and other incomes: Most lending institutions cap the loan amount based on financial stability or source of future finance. If you are entitled to pensions after retirement or have another source of income, say rent or PF, the amount of home loan can vary and increase. Similarly, it could help to show other valuable assets like property or FD under your name.
4. Existing bank customer: Applying for loan in a bank where you are its existing customer can help you with faster processing and a personalized service. Alternatively, searching for a bank that’s more liberal with upper age limits might turn out to be a hassle-free route.
Lending institutions are only concerned with how they will secure their loan amount. Like Shetty, if you are planning to go for a home loan, keep the above factors in mind and make your case.
Because at 40 you may well be young at heart, but remember, banks only consider the digits on paper!
(This article has been attributed to Housing.com)