For those who are young, getting home loans is much easier as compared to when they are senior citizens. However, this does not mean that a 60-year old does not have an option to apply for home loan. Lenders do make senior citizens eligible for home loans; however, the maximum age limit set is at 70 years of age. This means that a 60-year old borrower can only get a home loan with a maximum tenure of 10 years. Since the tenure is short, it is obvious that the loan amount would be accordingly set too.
If you are a senior citizen thinking of applying for a home loan, here are a few tips that can help you out:
- Go for a secured loan
A secured loan involves collateral being placed with the lender as security against the loan amount. If the borrower is unable to repay the loan amount, the collateral will be kept by the lender as compensation for the unpaid amount. Lenders prefer giving secured loans as they have collateral as financial security.
- Have a co-applicant with a steady income
As a senior citizen, your eligibility will improve with the inclusion of a co-applicant in the loan application. Make sure that the co-applicant has maintained a decent credit score. These are positive signs for the lender, and they can offer better terms as part of the home loan plan, such as a bigger loan amount.
- Avoid applying for a loan with various lenders
Every time that a borrower applies for a loan, financial institutions check the credit reports from credit bureaus. These checks are called hard inquiries, and they end up costing a few points of the credit score. Multiple loan applications can be harmful to a good credit score, which is why it is better to make sure of the approval chances before applying for a loan.
- Opt for a lower LTV
LTV (Loan to Value) ratio is the amount of the property value, which is financed by the lender through a home loan to the amount, which is paid as the down payment by the borrower. Opting for a low LTV would mean that you would have to pay a bigger down payment. However, this increases the loan approval chances and also reduces the repayment burden.
- Make use of an EMI calculator
A home loan EMI calculator is available on most financial institutions’ websites and is freely accessible. All that this online tool need is the home loan interest rate, principal amount, and tenure. With this, the calculator will then give the EMI results, after which you can decide whether the loan is an affordable option.
Also, do note that every lender functions as per its own terms and conditions. Hence, it would be advisable to first check with them regarding their home loan eligibility criteria for senior citizens. This would help fast-track the entire loan process.
