Source: ETNowNews ( )

Senior citizens often find it challenging to buy a home. Multiple factors like a stable job, regular income, high growth potential and a greater number of years left until retirement work in young borrowers’ favour while applying for a home loan.

But most senior citizens/retirees live on a pension income, and, on many occasions, they barely meet the home loan eligibility criteria. Also, banks and financial institutions normally determine the maximum applicable loan tenure as per the maturity age of 70 years. It means if you’re 60-years-old, a lender can allow a maximum term of only up to 10 years to repay your loan. This shorter repayment period either forces the borrower to increase the EMI size or reduce the loan amount. As such, it’s not easy for senior citizens to get a home loan unless they know their limitations and are ready to fulfil the eligibility criteria. If you are a senior citizen and want to buy a home on loan, here are a few key points that you must keep in mind.

(1) Carefully decide the LTV

As mentioned above, senior citizen borrowers usually get a shorter repayment period of up to 10 years depending on the age at which they apply for the loan. This is much shorter than a 30-year maximum tenure that a 40-year-old borrower would ideally get. A shorter repayment period increases the EMI size. So, senior citizen home loan borrowers should carefully decide the appropriate loan-to-value (LTV) ratio.

A lower LTV ratio means lesser EMI obligation, and it increases the chances of getting the loan approved from a lender. However, a lower LTV is only possible when the borrower can afford to pay a greater portion of the property’s value from own sources. In doing so, senior citizens should not compromise on other equally critical financial tasks like maintaining an adequate emergency fund. Senior citizens can also consider choosing a cheaper property to further reduce their EMI burden.

(2) Having a co-applicant can be helpful

Senior citizens usually get a shorter repayment tenure when they apply for a home loan. Many of them also fall short of fulfilling the income criteria that a lender may require. The best way to address issues related to fulfilling the eligibility criteria is to add a co-applicant while applying for a home loan. Having a family member as a co-applicant can improve the chances of getting a home loan and it could also help in increasing the loan amount eligibility.

(3) See if you could clear existing loans before applying for a home loan

If you are a senior citizen planning to apply for a home loan, see if you could close your existing loans first if they are close to completion. When a lender checks a loan applicant’s repayment capacity, they usually reduce their monthly income by their existing EMI obligations. So, even if you have two or three EMIs left under your existing loan, they can reduce your loan eligibility to that extent. So, by repaying your current leftover loans, you can improve your home loan eligibility.