Pointers to Ponder Before You Apply for a Home Loan in Your 40s

The times have drastically changed, and now, when an individual opens any website or newspaper, he/she can read about young individuals who graduate from college and hired by some of the top-most multinational companies. These companies are not only the most sought-after companies across the globe, but these are the companies that end up handing you a yearly package that is more than the life savings of a 50-year-old. This automatically puts such individuals ahead of 80% of the entire salaried population of India.

These days, thanks to the better job opportunities along with the increased salaries, professionals who are barely a decade out of college can buy their first house with the assistance provided by a Home Loan, by the time they reach their 30s or if possible, even earlier. There is a significant chance that you might have let this opportunity slip past you, due to some reason better known to you. At present, while you are in 40s, there is no doubt that you wish to buy a house with the assistance of a Home Loan. In the current situation, you may have succeeded in reaching a high stage in your career, and you may have a good salary. But this has also made you approach your retirement age and as you are burdened with numerous responsibilities such as taking care of your elderly parents, and keeping up with children’s education expenses, the entire prospect of Applying for a Home Loan might strain you financially.

When you choose to Take a Home Loan in 40s, there is no doubt that puts you on the responsibility of repaying that loan. More so, it may mess up your retirement plans and current financial state as well. To put it in simpler terms, if you are planning to retire at 60, you shall get approximately 15-20 years to pay off the Home Loan. This proposition implies that not only do you have a very small time frame to repay the loan, but you also have to ensure that you can keep up with the significantly larger EMI payments in this entire span of time to repay the loan.
The entire proposition may seem extremely tricky and impossible to execute, but it could be done. These points if followed carefully can get you out of a deep financial mess:

  • Maximizing the tenure
  • Making lump sum repayments, when possible
  • Increasing the down payment
  • Adding a co-applicant
  • Researching well before selecting a lender

Maximizing the Tenure:

Most of the providers of Home Loans allow 30 years to be the maximum tenure. However, this is for those people who avail a loan when they are in their 20s or 30s. If you are applying for a Home Loan in your 40s, you will have a lower tenure. This is done in view of the average retirement age to be 60. If you do possess a decent credit score and a steady source of income, etc. You might be able to talk the lender into extending the period of loan repayment beyond your retirement.

Making Lump Sum Repayments, When Possible:

While applying for a Home Loan, the borrower must ensure that the loan repayment tenure is in line with their retirement plans. This shall help in ensuring that the retirement corpus is not used for repayment of the Home Loan. This helps you get the added advantage of making lump sum repayments. As it is likely that you may receive a bonus, or perhaps from some gratuity, etc. Inheritances and other such windfalls are also taken into consideration here.

Larger Down-Payments:

If you are applying for a home loan in your 40s, you can also reduce your EMI outflow while repaying the home loan; this can be quite simply done by executing a bigger down-payment. This shall not just result in lowering the EMIs, these shall also mitigate the component of interest. But while doing so, you should ensure that you are not over-stretching yourself. One should also keep in mind that they must avoid bearing all costs, using money and finances that have set aside for situations of emergencies. This money is crucial, and if utilized properly, may result in a set back while repaying the loan taken.

Apply for a Joint Home Loan:

For those who have a spouse who works or a financially independent child, availing a joint loan makes a lot more sense, as the benefit of your working spouse or one of your financially independent children shall help you in becoming eligible for a greater Home Loan amount. In addition to this, it shall also reduce the outflow of EMI individually. Above this, you can also get better collective tax benefits as compared to the case of a single applicant loan.

Appropriate Research:

Almost every bank, NBFC, HFC and other financial institutions provide Home Loans. To determine the most suitable company, one must make the right assessment. There are many parameters which you should consider while selecting a suitable lender. It is not a wise decision, simply taking into account the rate of interest. One must assess the credibility and reputation of the lender. A great deal of work is simplified if the lender has the ability or capacity to guide you while choosing a suitable home. The lender must also guide you and give you advice regarding the flexibility of repayment, etc. It is beneficial to choose a lender who ensures that the paperwork and the formalities are minimum.

In conclusion, it is no secret that owning a home is what most people dream about. It shall not be a difficult dream for those who Apply for a Best Home Loan in the early stage of their careers. But for those who are applying for a home loan in their 40s should not worry either. They just need to follow the above-mentioned advice, to make their dreams come true.

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