Stuck In The Middle? Here Is How To Improve Your Chances Of Getting A Home Loan

Atul Srivastava, 45, has been in a transferable job and was provided nice accommodations by his company. This is why Srivastava kept on delaying his home-purchase plans. Now, his assumption that banks may not be much willing to grant him a home loan bothers him, as he is getting closer to his retirement age. However, there is no reason why Srivastava should be disheartened.
MakaanIQ shares some tips with those who are 45+ and want to avail of home loans:

Tenure troubles

If the borrower is aged, say, 45, a lender's prime concern would be the loan repayment tenure. Most banks offer home loan for a 30-year period, and for someone aged 45, the tenure has to be as short as 15 or less. A shorter repayment tenure also means your equated monthly instalment (EMI) amount would be higher. Keeping all this in mind, it is advised to largely depend on your savings for the home purchase and keep the loan amount as less as possible.

For self-employed professionals and non-professionals, it is easier to avail of a home loan, as the lender does not have to worry about the retirement factor. This is why banks offer these segments home loans up to the age of 65-70 years.

Bonding well

Banks may extend the tenure by a few years if you share a good bond with them. For example, if you maintain a fixed deposit account or get your wealth portfolio managed by a bank for years, it would show more confidence in your repayment capacity.

Extra income

You must consider that lenders not only look at the healthy retirement accounts or good credit history for granting home loans; they also require you to show a consistent monthly income to meet the fixed-obligation-to-income ratio norms. So, it is important for you to find other sources of income than your monthly salary if you are nearing retirement. This could include any incomes you earn as rent or any side businesses. Also, an applicant planning to work after retirement will have it easier with the lender.

Joint loans

Joint loans work in favour of people nearing their age of retirement, as it brings down the EMI amount. If you apply for a home loan with your children as a co-applicant, this may help you avail of the loan easily. Doing this would also provide tax benefits to both the parties.

Flip or step-down repayment

In a joint loan, banks also offer a step-down repayment facility when the income of one co-applicant is going to reduce after a certain period. This method enables lenders to recover the principal in the initial period, when the incomes of the co-applicants are at a higher level. Banks flip the incomes of the applicants after one of the applicants retires. This method works on the principle that one of the borrowers has to be earning till the end of the loan maturity. Also, applicants who are to retire soon can opt for home insurance, as it would act as a good risk mitigant for the lender.

Govt support

If you are a government employee, you must check about the various pension schemes available in the market. Under such schemes, banks consider a nominal percentage of the pension and the lump-sum amount of the retirement fund in the loan eligibility.