What is the best 'age' to go for a Home loan?

What is the best 'age' to go for a Home loan?

When it comes to purchasing a home, most people do not really have the luxury to become home owners by making a full, up-front payment. The escalating property rates mean that most of us have to rely on a home loan. The loan needs to be repaid over a period of time; typically within 20 years (or more, depending upon the lender) in which one has to pay EMIs. As such it is a good idea to go for the loan when you are employed. Let’s find out the best age to go for a home loan, the home loan age limit and the benefits of taking a home loan earlier or later in life.

What is the best 'age' to go for a Home loan?

The answer to the question, what is the best age to take a home loan is rather ambiguous. The right time to purchase the home actually depends upon the individual buyer; when he is comfortable to bear the expenses of the loan. Typically, it is better to go for the home loan when you are in your mid-to-late twenties or early thirties as this is the time when you are young and energetic, well employed and able to pay EMIs from your monthly income. Also, you are able to finish paying off your loan by the time you are in your 40s and can think of purchasing a second property, if you so choose.

That said, you can also take out a home loan later in life, when you feel you have saved enough to make a larger down payment and pay smaller interest rates. Lenders typically set a different age limits for home loan in India; staring at 24 years of age up to when borrowers in their 50s.

Benefits of taking a home loan in your twenties or early thirties

The home loan age limit begins at the age of 24; it is the age in which one would have typically completed at least 2 years of employment with the same organisation (which is a major eligibility criterion for home loans). This is also the age in which one would have tendencies to overspend on unnecessary things. Taking out a home loan and making monthly EMI payments can prevent one from making these unnecessary expenses. Also, you can get home loans for longer tenures when you opt for one at a young age. Long tenure loans also make it possible for one to afford smaller amount EMIs. Moreover, if you take on a home loan early in life, you can also close it early and dedicate your savings towards other important investments during the later years of your professional life. The greatest benefit of taking out a home loan when you are in your twenties or early thirties is that you have fewer financial responsibilities and a lot for flexibility before responsibilities of a married life and children begin to weigh in.

Benefits of taking a home loan in your forties and fifties

The maximum age limit for home loan differs from lender to lender. Almost all lenders allow you to take out home loans in your forties and fifties; however your maximum age at the end of the loan tenure cannot exceed 65 to 70 years, depending upon age limit prescribed by your lender. Also, there are several benefits of taking a home loan in your forties or fifties. For instance, if you take out a loan when you are a bit older, you would have accumulated enough savings which can make it easier for you to make a higher down payment. A higher down payment amount directly affects the interest rate and you can benefit from a lower interest rate on home loans. Moreover, you could potentially be in a leadership designation in your career which means you would be earning a good salary to afford a high monthly EMI amount without sacrificing your other expenses and regular investments. By the time you are in your forties and your fifties, you would have also completely settled in your career which means you would most likely have better clarity about the place in which you’d like to settle down permanently post retirement.

As is evident, the home loan age limit has little to do with what is the best time to take a home loan. Whether you take out a home loan in your twenties, thirties, forties or fifties, you should be comfortable with the EMI amounts and should repay the loan without defaulting.