Home loan in your 40s: Smart tips for a smooth process (India)

Introduction

In India, buying a new house has become a considerable milestone for most. Most aspiring home buyers depend on taking out a home loan to realize dreams of having a new home. Most financial experts advise everyone to take up a home loan early in life, which most people are in their 20s or 30s as the repayment period can go well over 20 years.

However, there is absolutely no reason why you cannot avail yourself of a home loan in your 40s. If you plan to buy a new house and want to borrow one, here are some few important things you should bear in mind.

 

Choose the right tenure

General Rule It is the general practice in financing institutions to offer a maximum period of 30 years for home loans, those who apply for loans under their 20s or 30s. Since retirement age is at the age of 60, generally nobody will be eligible for acquiring a loan for a long period of 30 years if one is under their 40s.

But if one has otherwise a regular income, a good credit history, a clean repayment record and also rapport building with the lender, then he can discuss the terms for loan extension with him while at the same time seeking the post-retirement time when repayment of the installments is still possible by setting EMI within feasible constraints.

 

Appoint to get a joint home loan

If you have crossed your 40s and are looking to apply for a joint home loan for any family member, your spouse, sibling, child, or anyone with the regular income and good credits, it is the best choice to get your loan accepted. Furthermore, applying for a joint home loan makes a person eligible for a home loan with a higher maximum amount and can collectively claim higher tax benefits.

 

Pay a higher down payment

When you apply for a home loan, the lender will approve only a maximum loan of 70-80% of the property's value. You have to pay from your pocket the remaining amount. This amount is called a down payment and is a prerequisite for your loan application to be approved.

The important point is that even at their 40s, one should attempt and pay more down payment than the minimum as stated; this only helps enhance the opinion of the lender regarding the good financial standing they have and can provide them with a larger loan or a longer term to repay.

This would also ensure that you do not borrow as much to start with, thereby making your EMI liability small, and thereby ensuring smooth repayment of the loan in case you wish to pursue all other financial goals.

 

Explore the lump sum repayment option

Experts around the world suggest choosing a tenure of repaying a home loan prudently so that it will not exceed your retirement age. In fact, you should ideally retire from active employment without major liabilities so that you are relieved from paying regular EMIs and enjoy life after retirement.

You must have noticed that since you are in your 40's you need to go for a 15-20 years of loan term. That's a problem because the EMI would be higher. A lump sum repayment option at the end is helpful, though.

You can negotiate with the lender and opt for a lump sum repayment, which is otherwise known as bullet repayment. In this mode, after every four years, you will be able to pay a sum amount. This will allow you to pay a much lesser EMI and repay the amount without straining your financial resources.

 

Optimize on the free prepayment

Essentially, prepayment is making repayment of the home loan amount before the actual tenure of repayment; you can even make partial or full payment of the loan anytime as desired. During the time the loan is in repayment tenure, if you earn some big bonus or income through dividends from any investments, you can pay against the principal amount.

However, before you pay the amount in advance, you must know if the bank is charging any kind of prepayment penalty or not. And in case they are, then the very purpose of repaying the amount in advance will get lost. So, therefore, while applying for the loan, you must seek the information regarding the prepayment terms and if no such penalty is charged, then you can avail of that and close the loan account as early as possible.

 

Conclusion 

In your case, if you availed of the loan after you reached 40 and before you were really freed, loans were paid earlier. Do your research well about the lender. In India, many financial organisations offer home loans. So, as a borrower, it is paramount that you do your research about the different lenders well to choose the right one. You must consider several parameters instead of making your decision based only on the interest rate. You need to test their credibility and reputation, services they offer, repay flexibility, charges they are applying, all documents, etc. Bottom Line Home is everyone's dream, and it has become easy to make it come true because of the home loan. You can get a home loan in your 40s as well, but you should be more cautious about it than others as it involves huge money and responsibility. So, keep the above things in mind before taking a home loan and start taking steps towards becoming proud homeowners.