Home Loan Borrowers Aged 45 & Above: Things to be Aware Of

Over the last 20 years, the applications’ for home loans have witnessed a tremendous transformation from individuals. The loan eligibility of an applicant is dependent on various factors such as employment history, creditworthiness, payment capacity, life stage, type of property, and so on. However, the age of an applicant is the most important factor which binds all the factors. The age group of home loan applicants can be broadly classified into three groups such as those in their 20’s, 30 to 45 years, and those above 45 years.

Individuals of the current generation earn a significant amount of higher salary when compared to their predecessors.  As a result, they represent a major chunk of the population who seek home loans. Individuals above the age of 45 years, also referred to as late home loan seekers also have good options. This permits them to work out their loan repayment tenure period.

Following are some factors which a late home loan seekers aged above 45 years must consider while availing a home loan:

1. Loan Options: When an applicant is greater than 45 years of age, a lot of financial institutions and lenders are quite sceptical in offering them a loan. Therefore it becomes quite important to do a greater depth of research before availing the loan. Even a minimal small differential of 50 basis points can contribute towards making a huge difference.
2. Loan Tenure: In general, financial institutions such as banks always restrict the home loan repayment tenure to the retirement age of a person. The standard age limit for retirement is set to be 60 years. Because of this reason, younger individuals can get a home loan with a 25 to 30-year tenure period whereas individuals aged above 45 years can get a home loan only up to their retirement age.
3. Income Band: The outcome of any home loan application is greatly dependent on the individuals’ quality of income, source of income, as well as stability of income. On a general note, an individual employed by highly reputed organizations can avail higher loan amounts based on the stability of his or her income. Financial institutions usually categorize certain sectors as stable or risky. Therefore, applicants working in stable sectors can easily avail home loans when compared to those working in risky sectors
4. Down Payment: A higher down payment amount usually works out well for individuals above 45 years of age. It is usually assumed that the late home loan applicant would have a significant amount of savings so that they can reduce their borrowings. Therefore, before jumping to any conclusion, it is much better to compare the different interest rates the individual earns from their existing investments against the interest on home loans.
5. Credit Worthiness: The credit score of an individual is amongst the first things the financial institutions go through before processing the home loan application. This is quite essential as it illustrates the expenditure, savings, as well as the creditworthiness of an individual.
6. Co-Borrower: As it is assumed that the capacity of an individual to repay a financial debt is inversely proportional to their age, it is better that one applies for a joint home loan account with growing age. This also contributes towards lowering the liability of higher EMIs and also offers certain tax benefits.

The addition of a co-borrower for a home loan application usually increases the individual’s eligibility. This is more important if the applicant falls in a higher age category and when the home loan amount is considerably high. Banks usually extend the cut-off age limit in case a co-borrower is present for a home application. This also increases one’s chances of getting a home loan amount with a longer repayment tenure period. It is also much better to add a younger co-borrower in case of a joint home loan application.

Conclusion

There is no doubt that the age of the applicant is quite an important factor when determining the eligibility for applying for a home loan. Individuals who fall into higher age brackets must always focus on the above-mentioned factors in order to optimize their loan tenure and loan eligibility. The aging individual must always opt for choosing a financial lender that is quite liberal in considering the applications of late home loan seekers.