Home Loan rules generally don’t change for people seeking it in their 40s. However, taking note of these crucial points may help you secure a loan smoothly.
Taking a Home Loan to fulfil the desire of owning a dream house is a long drawn process as the tenure usually runs for 20-30 years. Most people do not realise how essential it is to plan for their home purchase. An urban myth that was often found affecting the financial planning mindset of a young Indian is that taking on liabilities and credit early in someone’s career may not be feasible. However, the fact may be contrary!
A person in their 40s is more likely to have more recurring financial commitments than a 25-year-old. But, if you are looking to take a Home Loan and happen to be on the wrong side of 30, then you probably should keep these pointers in mind.
Carefully Choose Your Lender
After identifying an ideal property, you will look for an ideal lender for yourself who can offer a Home Loan scheme with best possible flexibility. It is best to do your research well as there are a number of banks and lenders available in the market offering competitive Home Loan schemes. Beware of the fine prints and don’t forget to ask about processing fees, prepayment charges (if any), etc. It is also a good idea to take the help of websites offering a comparison of different banks’ Home Loan features.
Apply With Your Spouse For A Joint Loan
Applicants who are 40 years and older often have recurring financial commitments, which pose a risk for Home Loan lenders since the availability of free cash in the hands of the applicant is limited. As a result, lenders tend to look for assets and other sources of income, which can help the applicant repay the loan in case of contingencies. In such a case, it is advisable to apply for a joint loan with your spouse so that the liability is spread between the both of you. This usually increases the chance of your application being approved.
Take On The Maximum Possible Tenure
If you’re applying for a loan at 40, most banks won’t facilitate a loan tenure of more than 20 years. That’s because they expect your income to drop after retirement. However, a short loan tenure might be a heavy burden considering the additional expenses of running a family, children’s education expenses, etc. In such a case, aim for the maximum loan tenure to ensure that EMIs (easy monthly instalment) remains affordable.
Reduce Liability By Increasing Down Payment
This works in a scenario where you have planned your career properly and have a healthy amount of savings by the time you hit the 40s. This should help you reduce your EMI burden by providing access to a lumpsum amount needed for the down payment. Bigger the down-payment, lower the loan amount and lower the EMI burden for your twilight years.
Settle Existing Credit Cards And Loans
Banks do not like to compete for attention when applicants already have other financial responsibilities. Therefore, if you already have a continuing loan or unpaid debt, these should be settled before applying for a Home Loan. Banks tend to reject applications where there are unsecured loans still running. You can also try to check your CIBIL Score to ensure that your previous debts have not adversely affected your Credit Score.
Additional reading: Home Loan Handbook: All Questions Answered