Nowadays, with the help of leading financial institutions, senior citizens who rely on their pension can also apply for a home loan. However, the amount sanctioned to pensioners may not be as high. The lending institutions may cap the loan amount to 25 lakhs or 50 times of the monthly pension, provided the monthly installment should be less than 40% of the monthly pension of the retired individual. Moreover, the loan term is fixed in such a way that the borrower’s age doesn’t exceed 75 years. This criterion significantly impacts the
amount senior citizens are eligible for. The collaterals required are the borrower’s property or insurance policies.
Let us have a look at some of the other important factors that the lending institutions consider while approving a home loan for pensioners.
- The pensioner applying for a home loan should have served the state or central government, PSU, defence, VRS, educational institutions, and other reputed companies.
- The loan amount availed through home loan should only be used for construction, repair or renovation of new/existing house or for buying a piece of land, purchasing of ready made house/flat.
- Minimum monthly pension received by the retired individual also plays a decisive factor at the time of loan approval. Based on the income, the loan limit is calculated. Therefore, for retired individuals with low pension might find it difficult to apply for a home loan. Retired individuals can increase their chances of approval if they add an earning individual as a co-applicant.
It not only increases their chances of obtaining the loan but also the loan amount may increase significantly.
- Usually, lenders offer home loan to pensioner below 75 years of age. However, the age criteria may differ from one lending institution to another.
Things to consider while applying a home loan for pensioner
The approval of home loan on pension depends largely on the credit score of the pensioner. Having a high credit score reflects the high repayment capacity of pensioners. Moreover, it also helps in avail a higher loan amount at a reduced interest rate. On the other hand, if pensioners have a low credit score, it can lead to the rejection of their application. This can further hamper your credit score.
Apply for a secured loan
Pensioners should avail a secured home loan. Since a it is pledged against collaterals, it is easier to avail as compared to an unsecured loan.
Equated Monthly Installments
With the help of an online home loan EMI calculator, retired individuals can calculate their monthly installments beforehand. This will allow them to have an estimate of the monthly cash outflow that they would have to incur to repay for the home loan. It is advisable for pensioners to calculate their EMIs beforehand and avail a loan amount depending upon their repayment capacity.
Check home loan eligibility, terms, and conditions of the lender
The home loan eligibility criteria for pensioner may vary from one lending institution to another. Therefore, it is advisable to check home loan eligibility as well as terms and conditions set by the lender beforehand. Also, you can check home loan eligibility using our home loan eligibility calculator.
Charges levied by financial institutions
Borrowers should make a note of the interest rate before availing the home loan interest rate. Even a slight variation in the interest rate can help the borrowers save a large amount of money in the long run. Therefore, it is important to study and compare the various types of loans available in the market. This will help them apply for a loan that best suits your needs. Along with interest rate, borrowers should also make a note of the pre-payment fee, upfront fee, and processing charges. Keeping all these factors in mind, it is advisable to compare various loan offers provided by different financial institutions. This will help the pensioners avail a loan that best suits their needs.
With the help of Bajaj Finserv Home Loans available at Finserv MARKETS, retired individuals can easily avail a loan with the help of a hassle-free online application process. Instant approval and quick disbursal of the loan amount are some of the added advantages of availing a Bajaj Finserv Home Loan. Lastly, it is advisable to read all the terms and conditions of the loan agreement carefully before signing it. This can help you avoid any inconvenience in the later stages.
Also, read about home loans.