How to take a Home Loan after Retirement

Sometimes few important things are postponed as per the time’s requirement. But it’s never too late to make your wish come true of buying a home, even after the retirement.

Retirement is merely a term being used by private and government organizations to signify the age of your work tenure. Nothing can stop you from taking home loan even after you have reached the age of retirement. Like it’s said; “it’s better late than never”, and the same can be implied to you taking a home loan after retirement. People when salaried are already burdened with their family expenses that they are unable to plan things the way they want. Every expense related to your family’s welfare becomes your priority and you spend money as per the preference. Sometimes few important things are postponed as per the time’s requirement. But it’s never too late to make your wish come true of buying a home, even after the retirement. Early you apply more you gain. As we all know that the maximum age to take a home loan cannot exceed 75 years. Therefore, if you take a home loan at the age of 60 years you are entitled to avail the maximum loan tenure of 15 years. Eventually resulting in comparatively higher loan amount, as more the loan tenure, higher the loan amount is offered. Post retirement, most of the retirees rely on their limited pension amount, as compared to people earning salary in full. Hence, it becomes important for pensioners to carefully choose between the types of interest rates which are termed as fixed and floating interest rates. Fixed rate of interest are offered wherein the interest rate does not change throughout the loan tenure, whereas in case of floating rates the interest keeps fluctuating depending upon the market conditions. In this painstaking effort they just need to choose low interest rate with nominal processing charges with no hidden cost. Several other charges to be monitored are prepayment/foreclosure charges, application and documentation fees, cheque bounce and swap charges, late payment penalty, etc. Further on, let’s understand a few key measures to follow prior taking a home loan after retirement. Adding a Co-applicant with Regular Income By adding a co-applicant the chances of loan approval increases. If the co-applicant is left with at least eight to ten years to retire, his/her home loan eligibility increases. Co-applicant with stable income has greater tendency to repay     the loan and lender shall consider him/her as a low risk borrower. Retired people have relatively less income as compared to salaried professionals. Therefore, the addition of a co-applicant helps in the enhancement of clubbed income, as well as their home loan eligibility. Women co-borrower or co-applicant(s) that include your wife or daughter can get home loan at comparatively low interest rates. Under Section 80C and Section 24, co-applicants can avail tax deductions on interest and principle repayment amount.   Using High-Yield Investments as Collateral Without collateral no home loan is sanctioned and to fulfil this eligibility criterion, senior citizens can deposit the forms of their mutual funds or equity investments. These investments come with high interest rates and works perfectly as collateral. Post retirement most of the retirees rely on pension with some additional source of income like rental income or bank’s interest on fixed deposit or amount deposited. These income sources cannot fulfil the criteria of home loan eligibility. However, equity and mutual funds investment may solve the issue.   Choosing lower LTV (Loan-to-Value) Ratio Loan-to-Value (LTV) is a term used by financial institutions to express the ratio of loan to value of the purchased house/property. For example, if market value of applicants’ property is Rs. 2 crore and the lender intend to finance Rs. 1.70 crore, the LTV ratio would be 85%. If the applicant chooses lower LTV ratio means that the borrower would be required to fund a bigger portion of the loan amount, resulting in lower loan amount required.   Maintaining Good Credit/CIBIL Score It becomes easy for lender to offer loan to the people who are 60 plus and have maintained good credit score throughout their financial past. Good credit score which is above 750 depicts the creditworthiness of an applicant and makes him/her a risk-free borrower. Senior citizens in order to apply for home loan should also use online loan eligibility calculators offered by various online portals to check their home loan eligibility.   Avoiding Multiple Loan Applications Frequent or multiple loan applications with same or different lender should be avoided at first instance, as it negatively impacts CIBIL score and reduces the chances of loan approval. Every time you apply for a loan, the respective lender performs a thorough check with the credit bureau regarding your credit history which is termed as a ‘hard inquiry’ and it directly impacts your credit score.   Using EMI Calculators EMI calculators are simple and convenient source for retirees to check their loan EMI instantly. Almost every financial institution and online marketplace provides access to EMI calculators online, wherein the applicant can check his/her exact loan EMI by just providing a few loan details, such as loan amount, loan tenure and interest rate. Applying for a home loan is a tough decision to make and to make it simple the applicant should take plenty of time by thoroughly checking and comparing from all the available options. Applicants should also perform a careful check on the loan procedure, policies and conditions offered by chosen lender before finalizing any home loan deal. Document Required:

• Identity Proof (Passport, Voter’s ID Card, PAN card, Driving License)
• Residence Proof (Voter’s ID Card, Utility Bills (Telephone, Gas, Electricity Bills), Aadhar Card, Passport)
• Retirement Proof (Experience letter and relieving letter from last organization)
• Last Pension Cheque
• 3 passport-sized photographs

  With the rapid advancements in the banking and financial sectors, it has become relatively quick and easy for senior citizens or retirees to avail home loan, as per their choice and convenience. Now, it has becomes simpler to own a dream house even after retirement for yourself or for your children.