How to Get a Home Loan After Retirement

    a house

    You’re never too old for a new home, and certainly not for a home loan. Procuring a loan after retirement may seem like a herculean task, given how getting a loan is a cumbersome process in the first place, even for young individuals. Also, lenders are quite reluctant to offer loans to retirees, which is evident given the absence of a steady source of income.

    If you’re nearing your retirement age, and are wondering how to get a home loan, here are some tips which could help you secure a home loan after retirement

    Limit the number of applications

    The credit score is an essential factor that is considered by the majority of lenders when offering loans. A good credit score entails easier procurement of loans, and in some cases, reduced home loan interest rates. A good credit score depends upon your past loans and repayment behavior.

    Also, having your home loan applications rejected by multiple lenders causes a dip in your credit score. So it is reasonably imperative to conduct thorough research of home loan providers before applying in one. Visiting every lender under the sun may seem like a tiresome process, so it’s advisable to visit online marketplaces, as these online platforms help you compare different home loan products across multiple lenders, assisting you in narrowing down your loan applications to the most favorable lenders.

    Apply for a joint loan

    The odds of your home loan approval increases drastically with the addition of a co-applicant. A co-applicant must be an earning member, typically children or spouse, who may assist you with the repayment of the loan. Lenders also increase the total loan amount if a loan is applied for with a co-applicant. Bringing in a co-applicant also brings in a host of tax benefits.

    Choose a lower LTV ratio

    Loan to value (LTV) ratio is the ratio between the loan amount to the value of the property being purchased, a home in this case. Lenders are willing to offer home loans to retirees who have opted for a lower loan to value ratio since the total amount covered in the loan is low and relatively repayable. 

    Opt for a secured loan

    Obtaining an unsecured loan when you’re not earning anymore is a near-impossible task since lenders require some security against their loan, in case of non-repayment. Since secured loans are backed with collateral, lenders are relatively willing to offer it to retirees. 

    Use an EMI calculator

    Calculating the size of your EMIs or equated monthly installments through a home loan EMI calculator is a good practice before filing a home loan application. It helps retirees and pensioners to get an exact estimate of monthly cash outflow. Thus, by calculating EMI, you can apply for home loans with lenders that fit your monthly budget and repayment capacity.

    Procuring a loan best suited to your needs can be tedious, and more so after retirement. But if you religiously follow the tips mentioned above and conduct thorough loan research, no one can stop you from getting that home loan and living in your dream house.

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