• Basic overview on what a Home Loan is

• What is the current Home Loan for Senior Citizens

• Differentiation on the Eligibility Criteria for Home Loans

• Interest Rates placed on Home Loans for Senior Citizens currently

• Illustration on different banks and their Home Loan plans for Senior Citizens in depth

• Paperwork Requirements for Home Loans to be approved

• Qualifications which can increase the chances of getting home loans

• Concerns that Senior Citizens face while applying for a Home Loan

• Conclusion

Basic overview of what a Home Loan is

A home (or) a housing loan, which is also known as a mortgage, is a secured kind of a loan which is a particular amount of money borrowed by someone known or maybe a bank which is used to purchase a property or a house. The sum obtained by taking a mortgage is eventually paid back via the means of Easy Monthly Installments (Commonly known as EMI’s) at a specified time frame. This time frame can range from 10 to 30 years under normal circumstances. Until the EMI is paid off, the ownership of the property is under the custody of the person or the organization that has provided with the loan. The lender can do as he/ she pleases if the borrower cannot pay off the debt.

What is the current Home Loan for Senior Citizens

As the title has stated, the current Home Loan for Senior Citizens is available for people who are above the age of 60. Basically, this loan is available for people who have retired. Usually, banks or lenders are a bit skeptical about giving loans to Senior Citizens since they barely have a stable source of income. Even though this Loan is in effect, the setbacks are a bit high compared to loans that are offered to young people. Some lenders charge a higher interest rate than the standard ones since there is an add on risk in providing a loan to Senior Citizens. The repayment is also adjusted to match the age of the applicant. Many of the banks limit their loans to applicants who are about to achieve the age or people who are near 75 years or more. However, this does not restrict Senior Citizens from attaining a Housing Loan at an affordable price.

Differentiation on the Eligibility Criteria for Home Loans

The rate of interest for Housing Loans for Senior Citizens and Aged Citizens differs in a major way. Some of the factors that play a role in determining the interest rates are age, employment, credit score etc. The following table will give a clear image of what the interest rate, maximum tenure, collateral etc. will be for retired and non-retired people. This is how the eligibility criteria differs from both

Interest Rates placed on Home Loans for Senior Citizens currently

The Home Loan interest rate for Senior Citizens varies from each bank and borrower and it isn’t always the same. Each bank has their interest rates set differently and we will go into the details in the next topic. The interest rate is determined by evaluating the eligibility of the borrower. The following table displays the interest rates and the lowest EMI amounts

Illustration on different banks and their Home Loan plans for Senior Citizens in depth

• SBI mortgage for Senior Citizens

Mortgage interest rate taken from SBI ranges from 6.75% per annum up to 7.50% per annum. The maximum age at which a person can take a loan from SBI is till 70 years of age and the loan can be paid back till the age of 75. The lowest amount that is payable is ₹ 649 per lakh. SBI Home Loan interest rate for Senior Citizens is calculated on the amount of loan that is provided, the capacity of the borrower at how fast he can pay off his/ her debt and the lender’s credit policy. SBI has an online calculator that can be accessed to calculate how much a person must pay.

• Bank of Baroda mortgage for Senior Citizens

Mortgage interest rate taken from the Bank of Baroda begins from 6.75% per annum and goes up-to a whopping 8.60% per annum. The maximum age for getting an approval is till the age of 70 years and the maximum age for repayment is 78 years. The lowest EMI amount that can be paid is ₹ 649 per lakh.

• PNB Housing Finance mortgage for Senior Citizens

PNB Housing Finance mortgage loan interest rate starts at 7.35% per annum and goes till 7.85% per annum. The maximum age at which a person can apply for a loan is 70 years and the time period a person can settle the debt is 75 years of age. The lowest EMI amount that can be paid is ₹ 689 per lakh.

• Bank of India mortgage for Senior Citizens

Bank of India has a Home Loan interest rate which starts from 6.85% per annum and goes till a high 8.85% per annum. The maximum return age that is set by the Bank of India is 75 years while coming with the lowest amount of EMI being ₹ 655 per lakh.

• LIC Housing Finance mortgage for Senior Citizens

LIC Housing Finance has a mortgage interest rate which starts from 6.66% per annum till a total of 7.90% per annum. The maximum age at which a person can apply for a mortgage is 70 years of age and the return age that has been set by LIC Housing Finance is 80 years under a joint applicant. The lowest amount of EMI that has been set is ₹ 880 per lakh.

Paperwork Requirements for Home Loans to be approved

Anything these days requires the submission of legal documentation and the same goes for applying for a mortgage. A Senior Citizen would basically have to submit the following documents to apply for a mortgage. Here is the list of the documents that must be submitted; however, these may vary in each and every bank and they might ask for additional documents

• Proof of identity: Aadhar card/ PAN card/ Passport/ Voter ID/ Driving license

• Proof of Address: Aadhar card/ Passport/ Driving license/ Utility bills of the past three months

• Income proof: Form 16 (or) the last three months’ salary slip. If it is a pensioner, then they will have to show a record of their pensions and finally submission of their bank statement from the last six months.

Qualifications which can increase the chances of getting home loans

Acquiring a home loan, when you’re a Senior Citizen, can be a tiresome task due to the different requirements that have been placed. Nevertheless, these tips can help Senior Citizens to gain Home Loans more easily:

Applying for a co-applicant: By adding a co-applicant, the chances of getting a home loan get strong. The drawback though is that you’ll have to make the co-applicant a person whos’ currently earning. The co-applicant can be an earning family member/ relative like a son, daughter etc. The plus point over here is that both the applicant and the co-applicant can save tax this way. If you add a co-applicant, you can also apply for a higher loan amount

Improving your Credit Score: The best way to have a better chance of getting a loan is to have a good credit (or) cibil score. A score of about 750 credits is considered the best, which displays your credit worthiness. A good credit score comes with a bonus, low interest rate on the loan

Making sure not to apply multiple times: Applying for a mortgage multiple times decreases the chance of getting a home loan and can result in reduction of credit score. This is known as a hard inquiry. A preferable option is to opt out for soft inquiry since a hard inquiry leads to the lender going though all your tax details, mortgage value and your credit score

Presenting additional collateral: A home loan is considered as a secured loan. To increase the eligibility of getting a mortgage, you can consider adding additional collateral. The lender, after seeing additional collateral, will approve the loan in a quick manner

Going for a lower LTV ratio: A loan to value (or) LTV is the ration between the loan amount and the value of the property which was purchased. A lower loan to value helps with approval of the mortgage. Low loan amount decreases the EMI set which is beneficial for a Senior Citizen

Closing previous loans that you have: If you’re planning to apply for a home loan, you must close the previous loans that you have. Having old loans decreases the chances of getting a loan. One more thing to add on is your credit card usage ratio must be below 30% if you want to gain a loan

Concerns that Senior Citizens face while applying for a Home Loan

The following are the two concerns faced by Senior Citizens when they apply for a mortgage (or) home loan

Loan tenure: Many lenders while they provide a loan would expect senior citizens to pay off their debt while they are under the age of 65-70 years since the probability of impermanence (or) death is pretty much expected. This is one of the reasons why the EMI’s for mortgage are high when a Senior Citizen applies when compared to a younger person. Not to mention that the lower tenure that is placed is also a burden since people are in their elderly age and cannot afford most of the time due to their unemployment

Equated monthly installment (EMI) affordability: When it comes to applying for a loan, the main factor that comes into play is the monthly income an individual earns, via which the loan can be approved. A bank usually favors an applicant whose EMI does not exceed 40-50% of the monthly income that he/ she earns. A retired person on the other hand doesn’t have a job and receives a very small portion of the salary that they made during their working days, and this is another reason which reduces the chance of a loan approval

Conclusion

Although it seems a bit difficult for a Senior (or) an Elderly person to take advantage of a Home Loan, it might be difficult but not impossible. Getting a mortgage, especially when you’re a Senior Citizen, will only come into action if you understand what must be done, a short summary will perhaps help. Adding a co-applicant, improving your credit score, addition of extra collateral can help a Senior Citizen to get a mortgage. Before you apply for a loan, please check the loan eligibility criteria (which differs from bank to bank) and prepare the required documents for submission

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