The Home Loan has a unique characteristic. It is the loan with the longest tenure of repayment. It can go up to 30 years at the maximum. The Home Loan tenure depends on various factors. Let us look at these factors in brief:
- Depends on the age of the applicant – The minimum age for Applying for a Home Loan is usually 21 years. The maximum age at maturity for any Home Loan is 70 years.
- In case of joint loans, the loan tenure depends on the age of the older of the co-applicants. Hence, if one of the applicants is aged 60 at the time of applying for the loan, the maximum Home Loan tenure will be 10 years irrespective of the age of the other co-applicant.
The Home Loan is one of the few loans in India whose repayment period extends much beyond the retirement age of the applicant. It is a recent change. Previously, banks were not sanctioning Home Loan tenures to extend beyond the retirement age of the older co-applicant.
Therefore, one can say that choosing a younger co-applicant does not get you longer Home Loan tenure.
When does having a younger co-applicant benefit you?
Having a younger co-applicant is beneficial only for increasing the Home Loan eligibility. You can add the income of the younger co-applicant and enhance your eligibility levels. Under such circumstances, you can get a Home Loan in India for a higher amount.
Who can be a co-applicant?
All co-owners of the property have necessarily to be co-applicants, but the reverse is not compulsory. What does this signify? If a house is in the joint names of the father and the son, they have to be co-applicants. Both of them can avail the benefits of income tax concessions.
It is not necessary for any co-applicant to be a co-owner of the property. A co-applicant can join as a co-borrower to enhance the Home Loan Eligibility of the principal borrower. If the co-applicant is not the co-owner of the property, they cannot claim income tax concessions available to Home Loan borrowers. Hence you find many youngsters including the names of their parents, especially if the parents are earning individuals. It increases their overall eligibility. However, there is a significant drawback in doing so. The Home Loan tenure depends on the older of the co-applicants reaching the age of 70. Therefore, these youngsters do not get the benefit of availing the longest tenure of 30 years because of the age restriction.
Father-son combination – A father can take a joint Home Loan along with his son. If the son is working and earning a decent sum, the father can add the son’s name as co-applicant and avail the benefit of higher eligibility. However, the tenure will depend on the father reaching the age of 70 years.
Benefits of choosing a younger co-applicant
Some banks have a stipulation that the Home Loan should mature when the principal borrower retires from active service. Usually, the retirement age is 60 years. Under such circumstances, a person can find it difficult to get a Home Loan when he is over 50 years of age at the time of application of the loan. Therefore, some banks have relaxed the norms and allowed persons over 50 years of age to bring in a younger co-applicant to extend the tenure of the Home Loan beyond the age of retirement of the principal borrower. Not all banks offer this facility. As it is, they sanction Home Loans to people with repayment tenure of 30 years or until the borrower reaches 70 years of age whichever is earlier.
In the usual circumstances, the rules are unambiguous. The tenure of the Home Loan depends on when the older of the co-applicant reaches the age of 70 years. Therefore, getting a younger co-applicant is not going to help you in the majority of the cases. It is applicable if you satisfy the condition stipulated in the above paragraph that you become eligible to extend the Home Loan tenure. However, under no circumstances do banks allow the home loan to continue beyond the age of 70 years of the older co-applicant.
It is advisable to check up your eligibility and loan tenure before you apply for your Home Loan. You can use the eligibility and EMI Calculator at the website of MyMoneyMantra, one of the reputed Home Loan service providers in India.
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