Property in Pune is generally steeper compared to a similar city in India. Real estate investment requires a huge chunk of investment. A housing loan supports the dream of owning a house for every individual. However, this long-drawn process (as the tenure usually runs for 20-30 years) becomes a challenge for those seeking a home loan at 45. Earlier it was thought taking on liabilities and credit early in someone’s career may not be feasible. However, the fact may be contrary! Most people do not realize how essential it is to plan for their home purchase.
People aged between 20 and 30 years have an early-mover advantage due to the age factor. People who are late entrants, i.e., who decide to purchase a house after the age of 45 years, at times find it difficult to get a housing loan on their terms because lenders have apprehensions relating to the age of such borrowers. Normally, a housing loan has a maximum tenor of 30 years but if you are already 45 years old, your loan tenor would be restricted to a maximum of 15-20 years (up to one’s working age). Lenders consider the continuity of income till the age of 60-65 years and hence, restrict the tenor also to the same.
A person in their 40s usually has more recurring financial commitments than their younger counterparts. You must keep the following pointers in mind if you are seeking a home loan at 45.
As per the RBI’s guidelines, you can get a loan of up to 90% of the market value, in case of loans up to Rs 30 lakh, 80% in case of loans between Rs 30 lakhs and Rs 75 lakhs, and 75% in case of the loan amount of more than Rs 75 lakhs. When you are applying for a home loan at a later age, you would generally be having a decent amount of savings which you may use for payment and opt for a loan of a lower amount.
Financial Institutions also offer ‘step-down’ repayment methods, where the EMIs are high initially and reduce at a later stage. As a practice, this flexibility is offered to borrowers whose jobs provide them with a pension. Hence, salary is considered for eligibility till the retirement age and after that, for the next five years, pension income is considered. It is also offered when a second generation is added to the loan structure who has just started earning and can continue with the liability, post your retirement.
Once you have identified an ideal property, look for an ideal lender for yourself who can offer a housing loan with the best possible flexibility. Research well before you finalize your housing loan. Opt for an institution that is friendly towards higher age bracket loan seekers. Beware of the fine prints and don’t forget to ask about processing fees, prepayment charges (if any), etc. You may also take the assistance of websites that offer a comparison of different banks’ Home Loan features.
If your spouse is working go for a joint borrowing. This usually increases the chance of your application being approved.
If you’re applying for a loan at 40, most banks won’t facilitate a loan tenure of more than 20 years owing to the drop in income after retirement. Aim for the maximum loan tenure so that EMIs (easy monthly installments) remain affordable.
The bigger the down payment, the lower the loan amount and lower the EMI burden. Use your existing savings to keep the minimum loan amount.
If you already have a continuing loan or unpaid debt, you must try to settle them before applying for a housing loan. Banks tend to reject applications where there are unsecured loans still running. Check your CIBIL Score and check that your credit score has not been adversely affected.
Keep the above-said pointers in mind when buying your dream abode using home loan at 45 or later. All the best!