In this age of high inflation, higher medical costs, and ambitious lifestyles, home loan is that financial tool which helps you to own you a home. But the process of getting a home loan for a younger person is very easy, as they just fit the eligibility criteria. But the question is – is it same with the senior citizens? The answer is ‘NO’. But it’s not that senior citizens can’t get a home loan. Senior citizens can get a home loan too but it’s going to be a bit difficult and they need to fulfil some additional criteria.
What makes the difference is the age and the income criteria. Every bank while lending wants to reduce their risk factor and wants to be highly sure about their repayments. Providing home loan to senior citizens increases the risk factor for the lenders as home loan itself is a long tenure loan and senior citizens are already above 60 years. The second fact which makes the difference is income. Senior citizens are the pensioners and their income is generally low when compared to a younger applicant as they receive only half of their salary as pension.
However, even after having these points into consideration, it is possible for the senior citizens to get a home loan.
Tips to Help Senior Citizens Get a Home Loan
Adding a Co-applicant with Stable Income
As senior citizens have comparatively low income and more age than that of a regular borrower, adding a co- borrower who are younger and with stable income enhances their eligibility. This also reduces the risk factor to the bank as now they have a person who is young and capable to repay their loan even if the main borrower is not there or is unable to repay. This can also help the co-applicant in tax deduction as, Under Section 80C and Section 24 of the Income Tax (I-T) Act, a tax deductions can be availed by the co-applicants but they need to be the co-owners of the property too. The deduction is on the principal and interest amounts both.
When Collateral is a High Yield Investment
Collateral is a must for any kind of home loan and is one of the eligibility criteria. And as the senior citizens already have low income which is in contrast with the general eligibility criteria of a home loan and hence adding form of mutual funds or equity investments which have a higher interest as compared to which is on home loans adds on to the eligibility of a senior citizen.
Lower LTV Ratio
In basic words opting for a lower LTV ratio means paying more amount in the down payment and going for a lesser amount loan. You can also understand this as- The LTV proportion is the proportion of the property or house financed by any lending organization or the bank. For example, the LTV proportion is 80 % if the estimation of the property is INR 1 crore and hence the bank gives INR 80 lakhs as a loan to the applicant. When one opt for a lower LTV this not decreases the EMI but it also increases the eligibility of the applicant.
Getting a home loan approved is a bit difficult for the senior citizens but if a senior citizen consider the above mentioned points and applies for the loan according they can get a home loan easily.