- Date : 27/04/2022
- Read: 3 mins
Buying a home is not an easy thing, for sure. Financial commitments run for many years, such as 15, 20, or even 30 years. You need to know your cash flow and be confident that you can handle the financial commitments. Many young people with good income choose to take out home loans at a young age.
Taking a loan for many years ensures that the EMI is lower. While some people choose to take home loans earlier in life, others do so later in life when they think about their retirement. However, taking out a home loan later in life has its own set of issues. If you take a home loan at the age of 45, you can get a home loan tenure of 15 years only, which will mean a higher monthly installment cycle.
We list out a few suggestions for you to keep in mind if you are thinking of buying a home in your 40s. Let's dive in!
Choose your Lender Wisely After Comparing
When you go out into the market for financial services, you will find a plethora of lenders. It is essential to do your research and take a look at different lenders before you finally decide on choosing a specific one. There are a lot of things to consider when choosing the right lender. An interest rate as low as 0.5% makes a huge difference when applying for a home loan, especially at the age of 40. To put it in perspective, a monthly EMI of Rs 50 lac with a 15-year tenure of 7% a year will be Rs 44,941. The same calculation with just a slight difference at 7.5% interest will take that EMI amount up to Rs 46,351.
You should see the lender's credibility and various other factors such as good repayment ways, as well as a lender who will have minimum paperwork.
Joint Home Loan Means An Increased Eligibility
If you take out a combined loan with your earning children or spouse, you can boost your home loan eligibility. When you have to pay EMIs later in life, it might be difficult. If you get a combined home loan, managing the EMIs would be much easier. If you take out a combined home loan rather than a single home loan, you will be able to take advantage of extra tax benefits.
Increase your Initial Down Payment
When you're 45, it's safe to presume you've put some money aside. Pay down a large portion of the initial downpayment with your money. It'll result in a lesser loan amount as well as an EMI. For example, if you take a loan for Rs 75 lacs for 15 years and put down Rs 20 lacs as a downpayment, the loan amount will be Rs 55 lacs. Similarly, if you only make a Rs 10 lac initial downpayment, the processing loan amount will be Rs 65 lacs, resulting in a higher interest rate.
Ensure that you don't give up all your savings for the initial down payment. You should always have an emergency fund in case of any contingencies.
Opt for the Maximum Tenure
Generally, if you take a loan in your 20s or 30s, you can take it for up to 30 years. However, if you take a home loan at 45, then the maximum tenure you can get is 15 years, considering 60 is retirement age. That being said, if your credit score is good and you have a steady income along with employment, then you can extend the tenure beyond the retirement age.