Home Loan For Pensioners - Home Loan Blog - Tata Capital

Home Loan for Pensioners

Mar 08, 2017

Getting a home loan is an exhaustive process. Both for the customer as well as for the lenders. The customer is interested in getting the least possible interest rates. While lender is concerned about reducing the risk of loan defaults.

So when the borrower itself is a senior citizen, the lenders become all the more cautious as generally, senior citizens do not have a very large and regular source of income. At most, they might have some kind of pension.

But this doesn't mean that lenders are not willing to give home loans for pensioners.

It's true that retirement reduces the ability to get a loan. But it's still possible. Pensioners can avail home loans but the amount may not be very high. It is generally capped on the basis of pension, existing financial assets and financial condition of the borrower.

So a lender might put a cap of XX times the monthly pension or some fixed amount, whichever is lower. Also like a regular person's EMI, there can be conditions where total EMI outgoes of the pensioner should not be more than 40% of the monthly pension.

All pensioners of Central and State Governments, Central and State Governments' Undertakings, Defense Services, reputed Companies, Educational Institutions, etc. are eligible for getting home loans against pension. The money can be used to purchase, repair and renovate properties.

Lenders also fix the loan tenure such that borrower's age doesn't exceed 75 years at the end of loan. Repayment is done directly by making monthly debits from the pension account of pensioner for EMI recoveries. Most lenders charge 0.5% as processing fee for the loan from central and state government pensioners. But this can be waived off too in special cases of if the pensioner is from defense services.

So if you are a pensioner, then it's not that difficult to get a home loan. Ofcourse the amount available to you will be less than what a non-retired person would have got. But that should not stop you from realizing the dream of finally owning a home.