Having your own house has its own perks. Some understand it early in their lives, while others take a lifetime. When a senior citizen earns a regular income in the form of pension or rental income, or already owns a house, he is generally eligible to apply for a home loan. However, each financial institution has its own specific rules that govern the loan policy.
Although most banks are averse to offering home loans to senior citizens, there are some financial institutions which enable the grey-haired men and women to lead their retired lives in their own abode.
Let us understand what are the different options available with senior citizens to apply for home loans:
I. LIC Housing Finance: The housing finance company allows home loans for the applicants who are less than 65 years of age and are drawing a monthly pension. The pensioners who can apply must have retired from a state government or central government job. Those who retired from PSU and nationalised banks can also apply.
The spouse must be a co-applicant when applying for a loan with LIC Housing Finance. When the applicant brings their child as a co-applicant, they can apply for a higher amount or for a longer tenure.
The loan can be applied for a maximum period of 30 years or when pensioner turns 80, whichever is earlier.
II. Tata Capital: This financial service provider also offers home loans for pensioners and senior citizens. The home loans are given against property and insurance policies to pensioners.
However, the loan given to senior citizens would not be as high as given to the younger applicants.
Some tips to remember
When senior citizens apply for home loan, they should remember some key tips to maximise their chances of getting the loan approved:
1 Apply with a co-applicant: It is advised to apply for a loan with an earning co-applicant. This will significantly improve the chances of approval for loan. If the retired applicant has an earning wife, or son, then one of them can become a co-applicant.
2 Secured loan: If the applicant already owns a property that can be given as collateral, it won’t be difficult to get the loan approval. When a loan is backed by an asset, there are greater chances for approval.
3 Lower loan to value ratio: The probability of getting a home loan gets higher when the loan to value ratio is low. This ratio indicates the percentage of asset value that is applied for loan. When a pensioner wants to buy a house for 60 lakh and he applies for a loan of ₹30 lakh then the loan to value ratio is 1:2 (30/60). The chances of loan approval would be higher in this case as against an application for ₹50 lakh loan.
So, those who understood the joy of owning a house late in their lives can also fulfil their dream. There are a few financial institutions such as Tata Capital and LIC Housing Finance that facilitate senior citizens, especially pensioners, to buy their own houses.