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Taking advantage of a home loan is never an easy proposition as you get older. Living a comfortable life after retirement is a dream for many, and many want the same to be experienced in their own homes.
Although mortgage rates are at their lowest, with some banks and credit institutions offering loans at nearly 6.90% interest, retirees
difficult to get a home loan. While some banks offer special loan products for retirees and retirees, the inherent vulnerability associated with age and increased vulnerability to failing health prevents many from accepting retiree loan applications.
Retiree mortgage seekers, unlike their younger, working peers, are more likely to miss their mortgage equivalent monthly payments (EMIs) or have difficulty repaying their loans on time due to lack of regular income and sudden unforeseen expenses. This leads to an increased risk of loan denial in many
case. Many retirees are unaware of some basic factors that can not only increase their chances of getting a loan, but also relieve them of impending loan debt.
Short loan term
Banks, housing finance companies and non-bank finance companies cross-check and check the backgrounds of retirees looking for home loans to decide their eligibility for the loan amount. With the retirement period being synonymous with loss of income and an increased tendency to illness, credit companies prefer to extend loans to retirees under the age of 70.
This means that a 60-year-old retiree can take out a loan for a period not exceeding 10 years. Retirees should apply for short term loans to ensure their loan applications are reviewed and approved all at once.
Lower loan amount
Whatever loan-to-value ratio (LTV) the lending company may profess, retirees should opt for a lower loan amount to make the loan application and approval process easier. This means that a retired loan seeker should be prepared to shoulder the burden of contributing a significant portion of the cost of the property before borrowing the rest of the amount.
In addition, a lower loan amount results in lower EMIs, which increases the affordability of the loan for the borrower and also reduces the credit risk for the lender. Retirees who are unsure of their EMI outputs can use an EMI calculator available online to check cash outflows and thus determine the loan amount they should apply for.
Adding a co-applicant helps
Retired people looking for a larger loan amount should co-apply for the loan with someone who has a stable income and a high credit rating. Indeed, retirees are only entitled to small loans. Applying for a joint loan with a younger person who is more eligible for loan repayment due to their age and regular income increases the chances of receiving a higher loan amount for a longer term at higher interest rates. lower.
Many retirees find that they have to pay higher EMIs due to the limited term of the loan and may add a co-applicant in their loan application to borrow more than they can easily repay through reduced EMIs due to of the longest loan repayment period available.
Provide warranty insurance
Credit companies may insist on taking mortgage insurance in addition to the mortgage to prevent the latter from turning into bad debt. Although the purchase of mortgage loan insurance is not mandatory, retirees must pay it to secure the asset for which they are applying for the loan.
However, retired loan seekers who have already purchased insurance coverage do not need to resort to mortgage loan insurance and can opt to offer their term insurance policies as collateral for the loan. This will ensure prompt loan approval and repayment of the entire loan amount in the event of sudden death of the borrower.
In addition, the retired loan seeker should make sure to verify that the amount of insurance coverage is equal to or greater than the loan amount to ensure full repayment of the loan.
loan of the policy amount. Although both types of insurance policies work to protect loan applicants in some cases, the loan applicant cannot transfer the mortgage insurance policy if the mortgage is transferred to another lender.
Take out a secured loan
Most of the banks are worried about giving loans without any collateral. Hence, retirees should opt for a secured loan. An asset-backed loan application guarantees greater acceptance by lenders. Loan companies prefer to give secured loans so that the asset can be used as collateral to pay off the outstanding loan amount if the retirement loan seeker is reluctant to repay the loan amount.
Warning:Atul Monga is co-founder and CEO of BASIC Home Loan. The opinions expressed are personal.
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