Buying Your First Home in Your 50’s: Top 5 Things to Know

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Buying a home is a dream for many Indians, but often due to other financial commitments, most people are not able to fulfil their goal until they are in their 50’s. So, if you are in your 50’s, and wish to apply for a home loan, read to know about the tips to remember.

Over the past few years, the number of people aged about 50 or more applying for a home loan has increased significantly. Typically, the financial organisations in India determine the loan eligibility based on factors like creditworthiness, employment history, repayment capacity, and age. The lenders categorise the home loan applicants in three categories based on their age – including those in their 20’s, 30-45 years and lastly 45+.

It is a known fact that youngsters, owing to the high number of active employment years ahead of them, have higher earning capacity as compared to people in their 40’s and 50’s. But, this does not mean that people in their 50’s cannot apply for a home loan. If you are a late home seeker, here are a few critical things you must consider before applying for a home loan.

Assess the loan options

Generally, the lenders in India, especially the NBFCs, are sceptical about offering a loan to people in their 50s or more. It is therefore vital to check the different lenders and their terms and conditions to choose the right lender that is offering loan at the best interest rate. Even a small difference in the interest can have a significant impact in the long run.

Choose the right tenure

Since age is one of the crucial factors that the lenders consider while determining the eligibility, they usually restrict the tenure to the applicant’s retirement age. Generally, young people can get a loan for a period up to 20 to 25 years, but, if you are aged 50 or more, you may find it challenging to find a loan for a longer-term. So, it is vital that you assess your finances well, and choose the right tenure so that you can easily repay the loan.

Opt for a higher down payment

If you are aged more than 50 and are looking to apply for a home loan, it is advisable that you opt to make a higher down payment. When you are 50+, you may have accumulated sizeable savings, which you can use to pay the down payment and lower the amount you borrow.

Know your creditworthiness

When you submit your home loan application, one of the first things that the lenders scrutinise is your credit score as it reflects your spending and saving habits and creditworthiness. It is therefore paramount that you check your CIBIL score before applying for a home loan and be vigilant about the dues, and try to improve your credit score and avoid the risk of loan rejection.

Repay your dues

If you have any outstanding dues like credit card bills or other loans, it can have a significant impact on your loan eligibility as the lenders may consider you as a high-risk borrower. You must, therefore, try to pay off your outstanding debts as this indicates higher availability of funds to repay the loan. Also, by repaying your previous dues, you can increase your eligibility to borrow a higher amount.

Apply for a loan with a Co-borrower

It is usually assumed that the home loan borrower’s repayment capacity is inversely proportional to their age. Hence, it would be better if you apply for a joint home loan as you grow old. This not only reduces your EMI liability but allows you to enjoy higher tax benefit (both the co-applicants can claim for tax deductions).

Additionally, when you apply for a loan with a co-applicant, it increases your eligibility, especially of the co-applicant is less than 50 years and have a steady source of income.

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