Things to know about home loans:
An individual can apply for home loans by a maximum of 58 years for salaried people & up to 60-65 for the self-employed. The pensioners can avail of loans for repayment up to the age of 70 years. The bank charges interest rates starting from 6.50% per annum, increasing up to 18% per annum. The interest rates are steadily declining as the repo rate of RBI is declining steadily. Thus availing of loans is becoming more & more attractive to the borrowers. The people who do not have a pension can avail of loans up to the tenure of 60 years of age or else up to the retirement age, whichever is early. The bank can provide the tenure of a very short span if the loan applicant has crossed the age of 50 years as the duration for retirement is very low for the borrower. For example, if the age of the borrower is 52 years and the retirement age in the company is 60 years, then, in that case, the bank approves loans for only eight years tenure, within which the borrower has to repay the loans along with the principal and interest amount.
The borrowers who are above the age of 50 years and are availing of fresh loans should try to do maximum down-payment and avail the minimum amount of loans as the monthly EMI’s can be high in case of the loans being availed late. The EMI calculator can show an individual the monthly installments being charged in case of the loan of a particular amount being availed. Thus by checking the EMI calculator, the individual can check whether it is affordable to take home loans. Ideally, the monthly EMI’s should not exceed 45-50% of the monthly salary, as the individual also has to bear the daily monthly expenses. The people in government jobs and do have a pension them the tenure can be extended by the bank up to 70 years. However, the sudden death of the borrower at any age can create problems for the borrower’s family, who should repay the remaining installments. Otherwise, the bank may need to seal the individual’s assets. Thus, the borrower should ensure that the individual should be in the best of health while availing of loans.
Things to know in case of applying for the loans post 50 years:
- Monthly installments:
The monthly installments for the loans could be higher in case of availing loans at a late age. Thus the borrower should check with the EMI calculator for the loans installments and accordingly plan to take the loans. The borrower should take care that monthly installment should not exceed 45-50% of the salary.
- Interest rates charged:
The banks may tend to charge higher interest rates if the loans are availed at a late age. Different banks have different policies, and thus accordingly, the interest rates may be charged to the borrower. Chances of charging the minimum interest on loans are less, and thus the loan applicant should keep these things in mind.
- Tax exemptions:
Though the monthly installments can be higher, the borrower can avail of income tax exemptions up to a limited amount. The exemption can be up to Rs.2 lakh for the interest amount and Rs.1.50lakh for the principal amount. For the higher repayment of loans, there are no further tax exemptions.
- Shorter tenure:
The borrower can avail of loans for a shorter tenure; however, government employees who have pensions can avail of loans for a longer span than those who do not have pensions. Thus the available span for the repayment of the loans should be checked before proceeding with the loans.
- Ensure consistency in income:
The people who cross the age of 55 should understand that some private companies may ask the organization’s senior staff to retire or take voluntary retirement from the service before the retirement age as the company wishes to provide an opportunity for the younger people in the organization. Thus in such circumstances, the borrower may find it difficult to repay the loans. Thus the overall trend in the company should be identified before availing loans at a late age.
The factors mentioned above should be taken into consideration while availing of loans at the late age of 50 years. For the self-employed persons, the tenure can be extended to a higher age for the loans than the salaried people. Thus the self-employed people have a better advantage than the ones who are amongst the salaried class.
