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home loan above 60 years

 


Documents Required for Senior Citizen Home Loan

A senior citizen will have to submit the following documents to avail of a home loan. However, this is a list of general documents banks require; the requirement may differ from bank to bank. Keep the following documents ready:-
  • Proof of identity: Aadhaar card/PAN card/passport/Voter Id/driving license
  • Proof of address: Aadhaar card/passport/Driving license/utility bill of last three months
  • Income proof: Form 16 or last three months salary slip. If a pensioner, then pension record. Last six months bank statement.

Tips to Get a Home Loan for Senior Citizen Easily

Procuring a home loan for senior citizens can be a task and a tiresome process. For a senior citizen who has retired from a job or does not have a stable source of income, it is almost impossible to get a home loan. It does make sense because a lender can not take a risk in such a case. How will a borrower pay EMI if they do not have a definite source of income.

However, the following are the few tips that can help senior citizens get home loans more easily:-

  • Adding a co-applicant:  Try adding a co-applicant to avail a home loan; it will increase the eligibility. However, you must add an earning co-applicant. You can add your earning son, daughter, or spouse if they are earning. Also, both applicant and co-applicant can save tax. Remember, by adding a co-applicant, you can also avail a loan for more loan amount. Tax income can be saved under section 80C and Section 24 of the Income Tax (IT) Act; the deduction is on principal and interest amount, both.
  • Improve your credit score: It is necessary to have a good cibil credit score for any loan eligibility. A score above 750 is considered good; it shows your creditworthiness. Not only that but also a good score will help you get a lower interest rate.
  • Do not apply multiple times: Numerous times, application for a home loan can decrease your credit score. It is considered a hard inquiry and maybe one of the causes for loan rejection. We suggest you use an online marketplace like Magicbricks to reduce the chances of hard inquiry. 
  • Pledge additional collateral: A home loan is a secured loan, meaning a house is pledged on which you take a loan. To increase the eligibility, you must consider pledging additional collateral. The lender's risk will be reduced, and the loan can be approved quickly.
  • Choose a lower LTV ratio: A LTV (loan to value) ratio is between the loan amount and the value of an asset purchased. For example, if a property is valued at Rs 50 lakh and the lender decides to provide a loan of Rs 40 lakh, then the LTV is 80%. We advise you to choose a lower LTV and make a more down payment. A lower LTV helps in easy home loan approval. Lower loan amounts also decrease the EMI, a plus point for a pensioner.
  • Assess EMI using EMI calculator: EMI affordability is one of the crucial factors determined by a lender who approves a loan. It is suggested that a senior citizen should not have more than 50%-55% of monthly income. Find out the optimum EMI before applying for the loan. It is easy to calculate the EMI using an EMI calculator. Determining the EMI beforehand also helps you manage other financial contributions like health expenses, etc.

Issues Faced by a Senior Citizen While Availing a Loan

Following are the two issues faced by a senior citizen or a retired person while availing a home loan:-
  • Loan tenure: Most lenders would expect a senior citizen to pay off a loan when they are 65-70 years old. This is quite obvious because there are chances of mortality also after this age. Lenders' expectation reduces the home loan tenure, and EMI substantially increases. This is one of the issues a senior citizen faces, whereas a 30-year-old does not face the same. The lower tenure also increases the burden on a senior citizen. 
  • Equated Monthly Installment (EMI) affordability: The most important factor is the monthly income considered to approve a loan. A bank favours an applicant whose EMI does not exceed 40%-50% of the monthly income. A retired person who receives a pension is a very small portion of the last drawn salary, reducing the chances of loan approval. 

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