With several approvals and more than a few eligibility criteria, procuring a home loan can be a tiresome process even for working individuals. For senior citizens who have retired from their job, it may seemingly be impossible for them to obtain a home loan. Quite naturally, it is a risky affair for lenders to loan money to retirees. This is so because they do not have a steady source of income. However, there are ways in which a pensioner can obtain a home loan.
Tips on How an Individual can Obtain a Home Loan after Retirement
Assigning a Co-Applicant – A pensioner’s chance of availing a home loan increases considerably if he/she adds an earning individual as a co-applicant. By applying children or spouse as a co-applicant, not only does the chances of obtaining the home loan increase, but the total loan amount increases as well.
Besides the benefits mentioned above, adding a co-applicant can also help you gain tax benefits.
Limit Your Applications – One of the most important factors that banks keep in mind before approving your home loan is your credit score. Your credit score also plays an important role in determining the rates of interest on the home loan. Having your housing loan application rejected causes a decline in your credit score, causing all future loan applications to likely get rejected.
As an alternative, you can always visit online marketplaces that help you compare loan details across all banks, comprehend if you are eligible to apply for a particular loan, and then apply for it only if you are certain about it.
Apply for a Secured Loan – A secured loan is a loan that is backed by an asset. These assets are used as collateral in order to obtain the loan. In the event that the borrower fails to pay the loan, the asset provided will be compromised to make up for the missed payments. A secured loan is easier to obtain that an unsecured loan, thereby allowing the pensioner to avail a home loan easily.
Choose a Lower Loan to Value (LTV) ratio – LTV ratio is basically the ratio between the amount of the property financed by the bank via the home loan in comparison to the finance the borrower would have to use as down payment for the house. For instance, if the property is valued at Rs.1 crore, and the lender loans you an amount Rs.80 lakh as home loan, the LTV ratio is 80%. Choosing a lower LTV will increase your chances of obtaining the loan and will reduce the burden of EMI as well. The lower EMI will also weigh during the process of approving the loan. A lower EMI will give a pensioner a better chance of obtaining the home loan.
Use an EMI Calculator - With technology amalgamated into banking and finance, it is now simply to figure out the Equated Monthly Instalment (EMI) that an individual has to pay towards a home loan. Retired individuals can use this to their advantage to estimate the monthly outflow of cash that they would have to incur to pay for the home loan. Understanding this before applying for a loan reduces the changes of rejection as pensioners can apply for a loan, after doing adequate research, based on their repayment capacity.
By typing in basic details like rate of interest, loan tenure, loan amount, down payment, etc., the EMI calculator will gauge all the information and provide you with all the details of the loan. This includes details like the total interest you would have to pay for the home loan, what the principle amount is, and naturally, what your Equated Monthly Instalment (EMI) payable towards the loan is going to be.
As it is understood, a minor variation in interest rates on a particular home loan can have a major impact on the total interest payable towards the same. Therefore, it is vital to study the various types of loans available in the market, the interest rates on these loans, etc. before narrowing down and choosing a particular home loan. One must make sure to use the several online marketplaces that help compare loan products from different banks, which is sure to help you obtain the best possible home loan that suits your requirement.
Hurdles Faced by Retired Individuals Looking to Avail a Home Loan
The Loan Tenure – Many banks and other financial institutions expect their home loan customers to pay off the loan by the time they reach 65 - 70 years of age. There are a few banks, however, that provide home loans to individuals up to the age of 75. This therefore reduces the total tenure of a home loan, increasing the EMI substantially. Lenders are then forced to believe that retired individuals do not have that kind of repayment capacity, making it risky for them to approve the loan. This is definitely a burden that retired individuals face while applying for a home loan. If given a choice between someone who is 35 years old and someone who is 65, lenders are most likely going to choose the former when it comes to disbursing a home loan. This is so because the tenure of the loan would be longer, making the EMI more affordable in the case of the 35-year-old applicant.
Equated Monthly Instalment (EMI) Affordability – For any institution that provide home loans, the monthly income of an applicant is one of the most important factors taken into consideration prior to sanctioning the loan. Typically, banks favour providing a home loan to applicants whose EMI for the home loan combined with the other loans they are presently paying for do not exceed 40% – 50% of their monthly income. As the income from pension for retired individuals is only a tiny part of a his/her last drawn salary, the likelihood of a retired individual obtaining a home loan reduces considerably.
Although it is slightly more difficult for a retired individual to obtain a home loan, it isn’t impossible. The steps mentioned in this article can help guide you through the process in obtaining a home loan if you are a retired individual.
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I have taken Home loan directly through Corporation Bank .I have applied for the loan amount of 12 lakhs for the tenure of 18years .More documents collected for this home loan and got the loan amount on time and it was really sufficient .There was no drawbacks faced so far .I am satisfied with the service .
I had applied for home loan with HDFC limited on few months before, they have sanctioned a loan for 22 lakhs but due to some problem of my builder from my end I kept on hold for the loan process. They have detected for the processing fee of 11 thousands but they refunded 9 thousands rupees. The tenure of 15 years. Interest rate was nominal of 8.55%.
With HDFC limited I have taken home loan on 8 months before which was processed through them directly. They have approved for 8 lakhs but as of now I have taken only for 5 lakhs remaining 3 lakhs I will get later from their end. Due to shop will come in commercial loan so I have split the loan amount to get it. For the tenure of 15 years. The processing fee for 5000 rupees. The rate of interest 8.8%, they have sanctioned the loan within one month.
I have availed Home loan directly through Punjab National Bank .The rate of interest and the processing fee was very high ,I have got the loan amount on delay basis and i have applied for 26 lakhs for the tenure of 15 years.I have not faced any difficulties until i have received the loan .
SBI Home Loan is excellent because I've a salary account with them. They offered me a interest rate of 9.5% approximately. I took the loan amount of Rs. 23 lakhs so far i have got only Rs. 16 lakhs since my building is under construction. My EMI is not yet started. They sanctioned the loan in 2 working days.
SBI is a best bank and they had a better option. There is only simple documentation required and executive came to my place for collecting all the documents. I got the loan within 7 days. SBI did not taken any processing charges and they gave better and cheap interest. They take minimal time and better response from the customer care so i had chosen SBI for my home loan.
My home loan was purchased from Central bank of India. The branch offer was approved the loan immediately and they had a good behavior with the customer. I got the better clarity about the loan process as well as the rate of interest in central bank of India is less than compared to others so i have chosen this bank and the Branch Manager helped me in a better way.
From DHFL I have taken a home loan almost more than a year. One of my cousin's friend working there he recommend to apply for a home loan. The process was smooth and sanctioned a loan within 6 days with sufficient amount of 20 years. The rate of interest was high.
ICICI bank has provided me a home loan at the time of i want on a immediate basis. Since the necessity is over they have provided me a timeliness loan. I taken the loan amount of Rs. 10 lakhs and the have charged me a higher interest rates which i'm not comfortable with.
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DIVYESH PRATAPBHAI FERFA
Reviewed on Oct 05, 2019
I have balance transfer for a home loan with existing finance to HDFC LIMITED. One month before only I have a transfer of a loan. They have outstanding amount of 10 lakhs for the tenure period of 10 years. The rate of interest is 8.6% only for mortgage charges for 8 thousands need to pay for it.
I have taken a home loan with SUNDARAM FINANCE on 10 years before which was processed through them directly. The amount which was given for 13 lakhs for the tenure period of 20 years. There was lot of issues I faced with them customer service is not good response. The rate of interest was high of 14% compare to other.
I have taken home loan directly through State Bank Of India .The rate of interest and the processing fee was nominal ,I have got the loan amount on time and got a clear picture about the loan process ,I have availed this loan for the tenure of 20 years .I have completed only 2 years of EMI so far .,
I have taken Home loan directly through Central Bank OF India ,I have got the loan on exact time ,The rate of interest and the processing fee was nominal ,I have got all the details about this loan very clearly through bank agent.The process was very easy and still this loan is active .
Nearly 11 years before I had taken a home loan with STATE BANK OF INDIA which was processed directly to them.The loan amount was sufficient for the tenure period of 15 years. The rate of interest and processing fee are nominal. They have sanctioned a loan within few days and the process was good.
I have just applied the home loan from Central bank of India. I had a reference over there hence i applied the home loan from Central Bank of India. Documentation process was hassle free. They have offered me a interest rate of 10.1% and the processing fee was 1% of the interest amount +18% GST charges. They have dispatched the loan 20 days. The staffs are so friendly
HDFC was the only bank which is offering for the home loan in the area where i have purchased the house so i opted with HDFC LIMITED. I had applied the loan amount of Rs. 28 lakhs and the given interest rate is 8.5% and they charged me a processing fee of nominal one. I took the loan 3 years ago and they took 40 to 50 days to sanctioned the loan.
I took a home loan with PNB Housing Finance Ltd because the terms and conditions are very liberal at that time, I have been expecting higher loan amount for my purchase. They have fulfilled my requirements and its more than 90%. The rate of interest is little bit higher and they are not following RBI guidelines. When interest rate is increased, they have started charging more but not reduced when it got reduced.
I have completed my home loan with HDFC BANK before 3 years ago. I did foreclosure and that time the interest rate is not much. I bought a residential property and the loan procedure is very easy because my papers are strong and clear to proceed faster.
I have applied for Home loan directly through Bank Of Baroda and got the loan on stipulated time .This loan was upto 15 years and got the loan amount on time ,The agent gave all the required information about the loan process .I have got all the required details about the loan process and there was no drawbacks faced as well.
I am not happy with rate of interest which was given by LIC Housing Finance. I have purchased the Flat in 2017August. The loan amount was 40L and its 15 years tenure. The processing fee is not applicable. The customer service is good. But every year, they are raising the interest rate which was not good.