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Home Loan to Buy an Old House

By Finserv MARKETS - Feb 23,2019
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Home Loan to buy an old house

There are several things to consider before narrowing down on your dream home. One such consideration is location. Most of the new constructions are found in the outskirts of cities, which might be inconvenient. From the point of view of long commuting hours or lack of essential infrastructure like schools, hospitals, banks and markets in the vicinity, location of your home is an important factor when zeroing in on choice. However, these issues can easily be alleviated by opting to purchase an older property.

There is a common fallacy that banks or financial institutions will only provide a home loan for new properties bought directly from the builders. In reality, lenders provide home loans for the purchase of older houses as well, as long as the applicant and property meet a few conditions.

Criteria to obtain a home loan for buying old house:

1. Age of the borrower

Lenders will check the age of the buyer, both at the time of the loan application and at the expiry of the loan tenure. Ideally, both should fall within the earning phase.

For the salaried class, lenders generally disburse a home loan, with a tenure that falls within one’s retirement age (58-60 years). In case of self-employed individuals like businessmen and chartered accountants, the maximum age limit can be extended up to the age of 65.

2. Age of the property

Banks will consider the age of the house as well as its physical condition at the time of loan approval. Hence, one should avoid buying very old property (of age greater than 50 years or more), since the building may be prone to structural problems and may require extensive repair work, renovation or even redevelopment in certain cases. It could also lead to the loan getting rejected.

Accordingly, the tenure of the home loan is dependent upon the physical condition and expected longevity of the house. This can be gauged from the condition of the house at the time of loan grant as well as the time of loan expiry.

In case of an old building say 35-40 years old, the lender would limit the tenure of the loan period to just 5-10 years. This would hike up the EMI payment.

3. Structural Audit

Before the loan is sanctioned for an old building, the lender will undertake a structural audit of the flat to ascertain its present age and structural strength. The loan approval is contingent upon the good opinion of the structural engineer.

4. Legal aspects

In case the loan is for a society flat, the lender may verify whether an association has been formed and that the land titles have been duly transferred in favour of the housing society. This ensures that in case of absolute damage to the property, the flat occupants have ownership of the land. This would avoid any future litigation.

5. Redevelopment property

In such a case, the lender would include a protection clause, whereby the builder assures and promises that the lenders’ interests are not hampered.

Borrowers can be rest assured that they will be able to successfully obtain a home loan to fund their dream home, irrespective of whether it is old or new, as long as it satisfies the above-mentioned conditions. Remember, as long as the home isn’t completely run down and you’re creditworthy, lenders are likely to approve your application and sanction the loan. So, while you’re looking for properties, don’t limit yourself to new constructions. You never know, you just might end up finding the house of your dreams in an old society that’s right in the heart of the city.

Now that you have zeroed down on your dream home, get yourself a Bajaj Finserv Home Loan with Finserv MARKETS, today! What’s more? The complete process is online and offers a host of other features and benefits that provide the maximum value for your investment.

Also, read about prepayment of home loan.

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522