Are You A Retiree Seeking Home Loan- Few Points To Note

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It may well be the case that after your busy years, you plan to build a home for your family and yourself in your golden years. And your saved money does not seem to build the home you desired for long. But at this point in time, there are some disadvantages that can be highly taxing for you.

Very low chances of approval of the desired loan amount

 Loan disbursal takes into account several factors and of them your constant cash flow is given prime importance as on the basis of it only you shall be able to service the debt amount. So, as in the current scene, your income source is just the pension amount, you will in a very rare case be given the high-ticket loan size that you might have applied for.

Nonetheless there is recourse for it, which can prove to be successful. You can add a working co-applicant to the loan application which can be your relative and with it his or her income source shall also be factored in to arrive at your loan eligibility. Also, a longer tenure for repayment can now be made available to you.

Also, there is a tax advantage as the amount paid towards the servicing of the loan ie. principal and interest can be claimed as deduction u/s 80C and 24.

Lower tenure for repayment

As you are a senior citizen, the maximum time you might have for the loan repayment can be at the most 15 years. This is likely to increase your EMI and hence if you are found to be not financially healthy enough to meet this obligation, there are higher chances that the loan application can be rejected.

Depending on the property value, opt for lower home loans as now are left with lesser years for repayment

 It makes great sense to do this bit as a lower LTV home loan amount is likely to be not rejected.

Interest rate determined by credit score

Interest rate type that varies across home loan product category should also be zeroed on depending on the current and future economic outlook as in the case when rates are likely to fall, floating loan choice would be good deal and in the other case choose the fixed rate option.
Also, ensure that you do not make application with several banks as then there is a high chance that interest rate decided for the loan goes to a higher side as eventually credit score that decides interest rate is lowered.

Story first published: Saturday, October 14, 2017, 11:46 [IST]
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