It is never too late to invest in a property. The question here is, if a senior citizen wants to buy a property, will lenders aid him, given the nature of the loan and the repayment tenure that lasts a decade. The answer here is yes. They can get a loan but after considering a number of factors. Because of less to no income life left for the senior citizen applicants, banks or NBFCs (Non-Banking Financial Companies) hesitate to give any kind of loans. Here are a list of hurdles that come on the way when senior citizens apply for a home loan:
Since, the pension amount is half of their income. Banks question the repayment capacity of the applicant. It is important to take the pension amount for senior citizens, as it is the basis on which the loan is sanctioned for them.
The applicant’s age is also taken into consideration before sanctioning a loan. Given the age of the applicant (60 + for senior citizens), banks calculate the EMI tenure accordingly.
3. Loan Amount
A senior citizen’s pension will not be as high as a young person’s earnings. Therefore, the bank will put a cap on the loan amount to be given to the person. The cap will be due to two factors – the age of the pensioner and his/her earnings. Also, most lenders would want an earning relative to be a guarantor in case, something were to happen to the primary applicant.
However, there are also some alternate routes, that will enable a senior citizen to get a loan easily:
If the senior citizen applies for a joint home loan with an earning co-applicant, then she/he can easily get the loan. Also, if the co-applicant is also the co-owner of the property then both parties can also avail discount under Section 24 and Section 80C of the Income Tax Act.
5. Providing Collateral
Pledging securities against the loan makes your chances stronger to get a loan. If you pledge high value assets like mutual fund investments. Your chances of getting a loan application approved are much higher.
Normally people take higher loan value and lesser down payment. However, pensioners are advised to go for a higher down payment and lesser loan value.
NOTE: A senior citizen looking for a loan should not make multiple applications as it may take a hit on their credit score.
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