Can senior citizens apply for home loans? ‘Yes,’ you can certainly, but it may not be a cakewalk. You need to undergo a few processes which will help get your home loan approved. Banks do not just grant a home loan to anyone. They evaluate certain factors before agreeing to give you a loan. The two factors that hold special importance are the applicant’s age and his/her income, these are the two factors that help you to find out whether they can repay the loan to the bank. This is what makes the pensioner or senior citizen difficult to get a loan from the bank. Difficult yes, impossible no! Consider some of the best senior citizens benefits that one gets when applying for a home loan.
Can Senior Citizens Get a Loan Easily?
Most senior citizens are wary of applying for a loan simply because they are worried that their loan request will be rejected as they are retired and do not earn anymore. Here are some of the problems you may meet in the way if you are applying for a loan. Alo where there is a problem there is a solution too. Find out the same here.
- Affordable or not?
In most cases, a pension may not be enough when compared to a regular salary. So, when a senior citizen tries to loan a certain amount, he may try to find it difficult in paying them off. Banks, only lend them money when they find out more about the income, whether the income is sufficient and the applicant won’t have any problem is paying off the loan.
- Loan Tenure
Let’s just say the more the age of the applicant, the lower their chances of getting the loan. This is mainly because banks are not sure of the lifespan of the applicant. So, senior citizens can only apply for a loan until 70- 75 years of age. They may find it difficult to pay off the loan in their lifetime and they have to pay off higher installments.
- Loan Amount
The ceiling on the loan amount is lower than the same that is offered to young people. A senior citizen must get at least Rs 5000 as a pension amount and their loan tenure should be 15 to 20 years. Banks lookout for a younger guarantor who can pay off the loan if something happens to the pensioner.
You may be facing these issues, but you may finally get the loan in a few simple ways.
- You need a co-applicant
If you are a senior citizen, you need an earning relative to back you up as a co-applicant, this will increase your chances of getting the loan. Also, in some cases when the co-applicant is the joint-owner of the property, both of you can avail tax benefits for senior citizens in India under Section 24 and 80C of Income Tax Act.
- High-Yielding Collateral
Mutual Fund investments are highly beneficial collaterals for senior citizens. If you are worried about market risks don’t worry, some amazing mutual funds can brave the market fluctuations with ease. Find out more about the same to help you get a loan. This is one of the best tax saving options for senior citizens.
- Higher Loan-to-value Ratio
When you opt for a higher loan-to-value ratio you may get a higher loan-to-value amount with a lesser down payment, but we still would advise you to opt for a lower LTV. This helps you to pay off your EMI’s with greater ease.
If you are a pensioner, ensure you do not apply for too many loans, home loans or otherwise in a short period, it reduces your credit score and hence reduces your chance of getting your loan approved or may also spike the rate of interest making it difficult for you to pay off the loan.
What Documents Do You Require for a Home Loan?
- Identity proof such as passport, Aadhar card, driving license, and so on.
- All the property documents.
- Passport-size photographs.
- Complete bank account details for the last six months.
- Complete details of previous loans if taken.
- Salary slips of the co-applicant or the guarantee such as child, relative.
- Submission of the copy of income tax returns of three months.
- Submission of 3 months of income tax returns of the guaranteer.
- Business address proof and details of income tax returns of 3 years for a non-salaried applicant.
- Senior applicants must study online marketplaces to find out which home loan will be the best option for them. Choose considering all options, tax benefits, your pension, and EMI’S, this will help them choose the best home loan offer for themselves.