A Home Loan is a long term debt commitment, and it is best to close it as soon as possible. But then we do not live in an ideal world. Conditions differ for different people. Some people land great jobs or become successful in business very early and, therefore, can take long duration Home Loans. Others might slowly progress in their career. They become eligible for a Home Loan as they reach the middle of their working life. Some people might even be looking for Home Loans in their 40s because they are moving to a new city, while some others may be looking for Home Loans because they want to buy a second home. Whatever may be the reason, getting a Home Loan in your 40s may sound like an odd thing, but by following some simple considerations, you can get Home Loans with almost zero extra effort.
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Before we jump into some of the Home Loan pro tips, let us first look at some lenders who offer great deals on Home Loans for borrowers in their 40s.
Tata Capital Home Loan is a reliable Home Loan provider that brings the name of TATA. The company offers Home Loans at interest rates starting at 9.25% p.a. You can borrow loans between Rs 2 lakhs and 5 crores. The best feature with Tata Capital Home Loan is their age limits. The age brackets for these Home Loans are between 24 and 65 years. Not many lenders offer such wide age bracket for a Home Loan. The salary requirement for these Home Loans is Rs 30,000 per month, and the applicant must have two years of job continuity.
Bank of Baroda Home Loan is a good choice for people who are looking for a Home Loan from a public sector bank. The bank offers even wider age bracket i.e., between 21 and 70 years for Home Loans. Loans can be taken for periods as long as 30 years. Loan amounts in metro cities can be as high as 10 crores, and even in semi-urban and rural areas, the bank can lend amount up to Rs 1 Crore. As a special feature, the bank also offers an option of a 36-month moratorium after the amount is disbursed. Bank of Baroda Home Loan also provides a special discount on Car Loan interest rate to its existing borrowers.
Now back to the considerations for borrowing in your 40s. Here are some tips:
Maximize the down payment on property: Whenever a person applies for a Home Loan, the bank will only finance up to 80% of the property value. The rest of the amount has to be paid by the buyer from their own pocket. This component is called the down payment on the loan. Banks make the buyer pay a down payment on a Home Loan because of two main reasons. First, it helps the bank judge that the borrower has enough financial wherewithal and discipline to collect money and pay the loan EMIs. Secondly, the lender hedges their risk by ensuring that the borrower also has enough sunk cost in the property that they will not lock up and leave the property if they cannot pay the loan, leaving the bank with a property it has no use of. When you are applying for a Home Loan, you can make a large down payment to assure the lender of your financial capability.
Float your EMI amount instead of loan tenure: Most of the Home Loans are granted on a floating interest rate. When you apply for a Home Loan, you are given a choice to either float your Home Loan tenure or float your Home Loan EMI amount. If you float your Home Loan tenure and the interest rate goes up, your loan duration increases, and with interest rates going down, the overall loan tenure is also cut short. If you choose to float the EMI amount, your monthly instalment will go up or down depending upon the direction where the interest rate went. If you are Applying for a Home Loan in your 40s, you should always choose to float your EMI amount. Interest rates can fluctuate widely, and there is a risk that your loan duration may stretch well beyond your age of retirement. Floating the EMI amount will ensure that you will be free from the loan by the time retirement is due.
Apply for a joint Home Loan: Home Loans are of very large amount, and lenders are always very careful about giving out these loans. They want to get their money back with a healthy return, which means that they will always try to lend to the most reliable borrowers with least possible income to instalment ratio. When you are applying for a Home Loan along with a co-borrower, who may be your spouse or a financially independent child, your overall income level shoots up by a considerable margin. It significantly lowers the risk indicator for the lender. If you are going to apply for a loan in your 40s, you must always apply for a joint Home Loan, no matter how much income you are making and how much the other person is making. It will make the loan application process go faster and smoother. And as an added advantage, you will be able to apply for a slightly higher loan amount.
Choose the shortest loan duration: When time is not on your side, it is best to keep the loan duration at the minimum. Most people take Home Loans for 20 years, with some people even taking 25 and 30 year Home Loans when offers are available from banks. If you are in your 40s, time is not the biggest asset that you have. You should be very careful about choosing the loan duration. Try to look at Home Loans of 15 years or less. For applicants in the early 40s, 15 year Home Loans are the best choice, and for applicants in 45 years plus age bracket, Home Loans should not be more than 10 or 12 years. While many lenders can allow for longer durations, you as the borrower should base your decision upon your income and earning age and not based on what the borrower is offering.
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