A home loan can be a mammoth liability to take on, not only because of its high amount but also due to its long tenure. Most lenders offer a maximum loan tenure of up to 30 years. Therefore, if you wish to pay off your loan before you retire, you should not be more than 30-40 years old at the time of loan application. Lenders also have an upper age limit for applicants at the time of loan term-end. Therefore, your age plays a crucial role in determining your loan eligibility.
Many people purchase a house within the first few years of their earning age. However, if you want to apply for a housing loan after the age of 45, here are a few important tips that can improve your chances.
Research Your Options Properly:
Conducting proper market research to know your options is crucial at any age. However, if you are above 45, this becomes even more critical. Remember, you must have other goals yet to achieve, and a difference of even a few percentage points can matter a lot. While looking for lenders, you must keep several factors in mind, including their eligibility, loan amount offered, interest rates, repayment terms, processing fee, customer service, and others.
Choose the Longest Possible Loan Tenure:
When you apply for a home loan after the age of 45, you may not enjoy the long tenure benefit available to other borrowers. For instance, if you are 45 and are a salaried employee, you have only 15 years until your retirement. Since you have less time to pay off your loan, the EMI amount might be larger than what you would have paid if you had taken the loan earlier. Therefore, try to choose the maximum loan tenure the lender is ready to offer you.
By doing this, you will be able to repay your loan in time without putting extra pressure on your finances. Don’t opt for a shorter tenure, as it may make EMI repayment more challenging. Usually, you may use a house loan calculator to calculate your EMIs and opt for a loan tenure according to your repayment capacity. However, in your case, you must opt for the longest possible repayment term to keep EMIs easier to manage.
Apply With a Co-Borrower:
Since taking a loan later in life may reduce your eligibility and increase the cost of the loan, applying for a loan with a close family member as a co-borrower, especially one that is younger than you, can be beneficial. Both the co-borrowers will be responsible for repaying the EMIs. You may also take advantage of your co-borrower’s younger age to avail a longer loan term.
Pay Maximum Down Payment:
You can liquidate your assets or use your savings to pay the maximum amount of the property’s price as a down payment. Paying a more significant down payment will lower the amount you need to borrow. As a result, your EMIs will stay smaller and easier to repay.
Maintain a High Credit Score:
Even at the age of over 45, you can increase your housing loan eligibility by maintaining a high credit score. Credit bureaus assign your credit score based on your repayment history, credit utilization ratio, debt-to-income ratio, diversity in your credit profile, age of credit, and other factors. A high credit score indicates responsible credit behavior. As a result, the lenders may agree to offer you a home loan even at this age.
Use Repayment Handouts:
Many lenders allow loan tenure extension even beyond retirement, particularly if you have a strong borrowing history. However, it is always better to pay off your loans early if you do not have any steady income to depend upon post-retirement. Pay a few extra EMIs whenever you get a bonus. Try to increase your EMI amount with an increase in your income. As long as you have taken the home loan at a floating rate of interest for non-business purposes, there will be no foreclosure charges applicable.
A housing loan after the age of 45 would be a huge responsibility. However, if you are late in making the crucial decision, keep the above points in mind to increase your eligibility and avail of a loan with favourable terms and conditions. These will also help make the EMI repayments easier, helping you to retire with peace of mind without any financial burden to carry.