Keep These Points in Mind if You Are in Your 40s and Applying for a Home Loan
Times have changed a lot with people opting to take Home Loans in their late 20s and early 30s. The easy availability of Home Loans is the main reason behind this change. Does that mean that people who have missed out on this opportunity early in their lives cannot Apply for a Home Loan? No, they can take maximum benefits out of the Home Loan even if they are in their 40s.
Taking a Home Loan in Your 40s
The 40s is a crucial period in your life. You must be in a good position in your organization with a decent salary package. There is no harm in going for a Home Loan even when you have crossed 40. Let us see the brighter side of things.
- You have higher maturity levels as compared to a person in their 30s
- Naturally, you are in a higher grade with a better salary package
- It entails that you have a higher eligibility level
At the same time, you have other responsibilities like children’s higher education, taking care of parents in their old age, and so on. Choosing to go for a Home Loan now involves taking up an additional responsibility of repaying your EMIs (Equated Monthly Instalments). Banks extend EMIs until you reach the age of 70. However, you might have a plan to become debt-free by the time you retire. It leaves you with around 15 to 20 years to make the repayment. Keep the following points in mind while Applying for a Home Loan in your 40s.
Try to Go for a Joint Loan
You can avail a joint Home Loan with your working spouse or one of your financially independent children. The advantage is that you become eligible for a higher amount of loan, but with a reduced individual EMI outflow. Both you and your co-applicant can avail the benefits of income tax concessions.
Maximise Your Loan Tenure
Banks prescribe maximum loan tenure of 30 years for any Home Loan. However, they do so keeping the age of the borrower in mind. Since you are in your 40s, banks might offer you a tenure that coincides with your retirement date. You can ask the bank to stipulate a longer tenure. Your credit score and steady employment history can work in your favor. Of course, you might get a pension after you retire, but banks do not take pension into account while calculating your repayment capacity. The joint borrower or co-applicant comes handy under such circumstances. They might have adequate service left in their careers.
A More Significant Down Payment is a Possibility
You can reduce your Home Loan repayment outflows by agreeing to contributea more substantial down payment. It will not only reduce your EMI but also reduce the interest component. At the same time, ensure that you do not tap into your savings too much. You need money to cater to various emergencies like medical treatment, higher education of children, and so on.
Explore Possibilities of Lump Sum Repayments
The primary objective behind coinciding your loan tenure and retirement date is to avoid using your retirement corpus towards clearing your Home Loan liability. However, you should explore the possibilities of making lump sum payments from your gratuity or bonus that you receive on retirement. It can bring down your overall liability.
Conduct Extensive Research
There was a time when searching for the right lender was difficult. Today, you have the internet to help you out. Let our experts at MyMoneyMantra research and zero in on the most suitable lender for you.
Go for Home Loan Insurance
In your 40s, it is better to play it safe by going for Home Loan insurance. You protect your family from having to repay the loan in case of any untoward event. As you are older, the premium will be higher. However, banks finance this aspect as well.
If you have missed the bus in your 30s, there is no need to worry. You have a right to live your dreams and take a Home Loan even after you cross 40. Banks do not have any problems in financing people in their 40s. Take the necessary precautions and Apply for a Home Loan as soon as possible. Delaying it further can be detrimental to your interests.
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