Most people choose to avail a home loan to purchase the house of their dreams. However, lenders have eligibility clauses and only those borrowers that fulfil these requirements can qualify for the loan. For starters, if you are a salaried individual, you would need to have a good credit score as well as payment history to prove your creditworthiness. But what about individuals who are not actively earning, such as senior citizens? Won’t it become hard for them to avail a home loan? Let’s find out.
Most lenders are hesitant to offer loans to people aged 60 and over, especially if they do not have a regular income. Also, home loan interest rates might be slightly higher for older people and senior citizens than what is available to younger loan applicants. This is based on the lower mortality of the older applicants. But with proper planning and some adjustments, you can surely get the required home loan amount at an affordable interest rate.
Here are some tips for senior citizens who are planning to avail a home loan.
Have a good credit score
To be eligible for any loan, a borrower needs to have a good credit score. A credit score over 750 can make the home loan application process quite easier. However, you should avoid making multiple loan applications with different lending institutions as it will have a negative effect on your credit score.
Getting a co-applicant to apply for the loan
A senior citizen can apply for a loan by adding a co-applicant. By doing this, the borrowers’ financial stability increases as the repayment is shared between the two co-applicants. However, ensure that the younger co-applicant has a good credit repayment history to be approved as a co-signee on the loan.
Provide collateral on loans
As senior citizens do not have a regular income, their eligibility for a home loan drops. To qualify for the loan, a senior applicant can pledge a high-value collateral as security, such as equity shares or mutual funds. Doing so will reduce the risk involved for the lenders and improve the chances of loan approval.
Having a low loan-to-value ratio
Paying more towards the down payment (DP) is another way of getting a home loan, which will also result in a shorter loan tenure. This allows lending institutions to be able to trust the borrower as most of the amount is paid in advance despite the applicant’s ‘retired’ status. This method is most effective for those with decent liquid savings at hand. Pairing up with a younger co-applicant will further improve the chances of home loan approval.
Given below is the basic criteria for home loan eligibility:
- The applicant must be an Indian citizen.
- S/he must have a work experience of at least 03 years.
- Must have a CIBIL score of over 650.
- Must be between 23 and 70 years of age to apply for a home loan.
Mentioned below are the basic documents one requires to apply for a home loan.
- Identity proofs, such as Aadhaar card/passport/PAN card/driving license, etc.
- Address proofs such as Aadhaar card/passport/electricity bill, etc.
- Form 16 or your latest salary slip.
- Bank statements for the last 03 months.
While following the above tips and tricks will not ensure that senior (older) citizens get a home loan, it will definitely make it that much easier to avail one. Also, it is advisable to check on your loan eligibility and calculate your EMIs with the help of an eligibility calculator and a home loan EMI calculator. Ensure that you understand the services offered by various lenders before opting for the one that offers favourable home loan terms and benefits.