Kolkata: A home loan is the biggest financial transaction that an average individual undertakes in life. It usually involves an amount that is equivalent to the income of a few years and it has to be repaid over a long period — usually in the band of 15-25 years. Therefore, the timing of the loan is almost as important as the interest rate charged by the lending institution.
Under these circumstances, it is natural to wonder what is the optimum age to take a home loan. Usually, an individual can apply for a home loan after he/she is past 21. If one has a co-applicant, the minimum age to apply for a home loan can be as low a 18 years, says one major PSU bank. However, it is expected that almost none applies for a home loan at that age. Let’s have a closer look.
The age span for home loan
Indian banks and NBFCs (non-banking financial institution) entertain home loan applications over a big age group — 21 years to 60 years (or retirement age, whichever comes first) for salaried individuals. The maximum age is 65 years (for some lenders, it is 70 years) for those self-employed individuals. But it is obvious since one usually repays a home loan for any length of time between 15 and 25 years, the younger the age of the applicant, the easier it is for the borrower to pay off the loan.
“Generally, applying for a home loan in your mid to late 20s or early 30s is considered advantageous. At this age, you are likely to be well-established in your career. Consequently, you can also manage your loan’s monthly instalments (EMIs) comfortably,” states Aditya Birla Capital, one of the most prominent NBFCs of the country.
Thirties the sweet spot
Most financial planners point out that one is likely to be best positioned for applying a home loan when one is in his/her thirties. The reasons are quite a few — one, most individuals reach a stable financial situation and a better grip on expenses which allow them to budget effectively; two, the income and creditworthiness are better at this age and three, most plan their families by the time they are in their thirties.
One of the prime concerns for lenders is that the loan has to be fully repaid in such a time that it is well within the earning years of an individual and there is minimum chance of a default. Therefore, all banks set an age limit for housing loan. Another factor that all lenders want to ensure is that the borrower is not burdened with a significant debt close to the retirement. At any rate, no lender will like to see a loan repayment tenure spilling over to the post-retirement years of an individual.
However, individuals vary and so do their plans, income and goals. The best way to proceed is to consult a qualified financial planner before taking such a momentous decision.
A home loan unlocks a dream home for a family. It is also the biggest financial transaction that most common people undertake in their life. Therefore, one should carefully consider a few factors associated with a home loan. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
