Home loans for retireesWAALI news

Just a few days ago, I came across some UN estimates of increasing life expectancy. Life expectancy in India is estimated to reach 82 years by 2100. Life expectancy in the country is currently over 70 years. In 1950, it was 35.21, according to the data. Comparing the given data, life expectancy in India has improved by 57%.

The increase in life expectancy is attributed to numerous medical and health advances. If we consider the rush of Covid-19 infection into human homes around the world, we find that the invention of the virus vaccine saved humanity from extinction. Unfortunately, millions of precious lives have been consumed by the virus in different regions. The benchmark on Covid-19 infection is that the creation of vaccines against deadly viruses has been one of the most important medical interventions that have dramatically reduced death rates. Indeed, many medical and health interventions have improved life expectancy in India.

You must be wondering why I am talking about life expectancy. Fundamentally, today’s straight talk theme is about seniors, specifically retired government officials. Today’s topic is based on an email from a state pensioner who is currently in his second year of retirement and receives his monthly pension from a bank branch. The retiree is looking for a home loan but hesitates to contact the bank for the installation. He asks: isn’t there a special home loan program for retirees like him? Interestingly, he cited increasing life expectancy as a plea for retired government employees to benefit from home loans and other programs. However, he was specifically looking for details on home loans for retirees.

Generally, getting a business home loan is considered a lengthy process as it requires lengthy paperwork and various approvals. And for retirees, getting a home loan seems impossible because their age is not taken on their side and their income is limited. However, banks and non-banking financial companies have introduced housing loan programs for retired civil servants. So there are certainly ways for a retiree to get a home loan against their pension and other income, if any. However, the retiree can get the loan from the bank where he has a retirement account. However, some banks offer home loan facilities to retirees who maintain their pension with other banks. Normally, the amount of the mortgage for retirees is linked to their pension. However, if the pensioner applies for the loan together with his children or spouse, he will benefit from an increase in the amount of the loan and will also benefit from tax advantages.

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Meanwhile, J&K Bank has set up a home loan program for the general public that also accepts state pensioners. Retirees from UT/central government, state/semi-state corporations, self-governing corporations, and state institutions are eligible to receive a home loan from J&K Bank for the purpose of purchasing land for the construction of a residential building on it; for the construction of houses/residential; direct purchase of a built house/apartment (fully built or under construction); for repairs and renovations/additions/modifications or finishes to the existing home. Here are some key features of J&K Bank’s home loan program for government retirees:

What is the maximum loan amount granted to a retiree under the scheme?

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If a pensioner wishes to obtain a loan to build/buy a house/apartment, the bank approves the loan based on the cost of the project. However, the retiree has to pay the margin and the bank will also link the loan amount to their ability to repay. The margin is between 10% and 20% depending on the amount of the loan.

For the purchase of land to build a house, the maximum amount of finance is at least 75% of the cost of the land, 75% of the total housing loan eligibility and is subject to a maximum of Rs.75 lakh.

For the addition/modification/completion of the home, the retiree will receive a loan amount based on the estimated cost of the addition/modification/completion of the home minus the specified margin, subject to the obtaining the necessary authorizations from the competent authorities. .

For repairs/renovations/, the loan amount is linked to the estimated cost of repairing/renovating the dwellings less a specified margin.

In particular, loans for the repair/renovation of a single dwelling can be drawn several times.

It should also be noted that the total withdrawals (excluding conversion) from retirees cannot exceed 50% of their pension/net monthly income.

What documents must be presented by the retiree as proof of income?

The documentation in this regard is very simple. According to the bank’s scheme, the pensioner must provide a copy of the PPO and the monthly pension certificate. If a retiree does not have a retirement account with J&K Bank, they must provide a retirement account statement for the past six months

What is the retirement loan repayment schedule?

For retirees, the loan is repayable in EMI (equivalent to monthly payments) until the retiree turns 75. In cases where spouses, children, siblings become co-borrowers/co-borrowers, the age of the youngest borrower/co-borrower may be taken into account throughout the term of the loan, provided that their contribution to EMI or at least 40%.

What other specific conditions should a retiree be aware of?

In cases where the applicant applies to the Bank for a loan facility for the purchase of land, he must declare, by means of an affidavit of undertakings, that he intends to construct a housing unit on said land will start the land/land within 02 years and completion of construction within 03 years from 01.01st payment.

In cases where the applicant owns land and applies to the bank for a loan for the construction of a house, a copy of the permit and the plan/plan approved by the competent authority in the name of the person applying for the loan facility housing must be submitted to the bank.

In cases where the applicant wishes to obtain a loan for the purchase of a constructed house/apartment, he must declare by means of an affidavit that the constructed property has been constructed in accordance with the approved building plan.

Do pensioners have to provide a guarantee to the third party as additional guarantee?

Yes. Pensioners benefiting from the mortgage must provide a guarantee to the third party of the spouse/legal heir entitled to the family pension, as well as an additional guarantee from one person. This is in addition to the mortgage on the house for which a loan has been obtained.

About Evelyn C. Heim

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