Housing loan for pensioners

If pensioners apply for the loan with their children or spouse, they get an increase in the loan amount and also gain tax benefits
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Just a few days back, I came across UN estimates about life expectancy to move up. The estimates peg India’s life expectancy to hit 82 by 2100. Currently, the life expectancy in the country is 70 plus. It was 35.21 in 1950, reveals the data. By comparing the given data, life expectancy in India has witnessed improvement by 57%.

The increase in life expectancy is attributed to numerous medical and healthcare advancements. If we take the onslaught of Covid-19 infection on human habitations across the world into account, we find the invention of the vaccine against the virus saved the human race from extinction. Unfortunately millions of precious lives were consumed by the virus across various geographies. The point of reference to the Covid-19 infection is that the creation of vaccinations against deadly viruses has been one of the most crucial medical interventions, significantly lowering mortality rates. Precisely, numerous medical and healthcare interventions have resulted in the improvements in life expectancy in India.

You must be thinking why I am discussing life expectancy. Basically, the motto of today’s Straight Talk is around elders, more specifically about retired government officials. An email from a government pensioner, who is currently in the second year of his retirement and is receiving his monthly pension from a bank branch, forms the basis of today’s subject. The pensioner is looking for a housing loan, but is reluctant to approach the bank for the facility. He questions: Isn’t there any special housing loan scheme for pensioners like him? Interestingly, he has quoted increased life expectancy as a plea to bring retired government employees under the ambit of housing loans and other schemes. However, he has specifically sought details about the housing loan scheme for pensioners.

Generally speaking, obtaining a housing loan for working individuals is considered a tedious process as it requires lengthy documentation and various approvals. And for retired persons, procuring a housing loan apparently seems impossible because their age is not taken on their side and also of restricted income. However, banks and non-banking finance companies have housing loan schemes in place for retired government employees. So, there are definitely ways and means for a pensioner to obtain a housing loan against their pension and other income, if any. However, the pensioner can get the loan from the bank where he or she maintains a pension account. However, some banks allow housing loan facilities for the pensioners maintaining pension with other banks. Normally, the quantum of housing loan to pensioners is linked to their pension. But, if pensioners apply for the loan with their children or spouse, they get an increase in the loan amount and also gain tax benefits.

Meanwhile, J&K Bank is having a housing loan scheme in place for the general public which also accommodates government pensioners. Pensioners of the UT/ Central  Government,  Government  /  Semi Government Undertakings, Autonomous Bodies and Govt Institutions are eligible to procure housing loan from the J&K Bank for the purpose of purchase of plot of land for construction of residential house thereupon; for construction of house/flat; outright purchase of a built house/flat(fully built or under-construction); for repairs and renovation/additions/ alterations or completion of the existing house. Here are some important features of the J&K Bank Housing Loan Scheme for government pensioners:

What is the maximum loan amount allowed to a pensioner under the scheme?

If a pensioner wants to obtain a loan for construction/purchase of a house/flat, the bank will sanction the loan as per cost of the project. However, the pensioner has to pay the margin and the bank will also link the loan amount to his/her repaying capacity. The margin ranges from 10% to 20%, depending upon the quantum of loan.

For purchase of land for construction of house, the maximum quantum of finance shall be minimum of 75% of cost of plot of land, 75% of total housing loan eligibility and subject to maximum of Rs.75 lakh.

For  Addition/Alteration/Completion  of  house, the pensioner will get loan amount based on the estimated  cost  of  addition/alteration/completion  of  house  less  by  stipulated margin subject  to  condition  that  where  ever applicable,  necessary permission has to be obtained from the competent authority.

For repairs / renovation/, the loan amount is linked to the estimated cost of repair/renovation of dwelling units less by stipulated margin.

Remarkably, loans for repair/ renovation of a single residential property can be availed multiple times.

It is also worth mentioning that the pensioners’   total   deductions (excluding commutation) shall not exceed 50% of their net monthly pension/income.

What are the documents to be submitted by the pensioner as income proof?

Documentation in this regard is very simple. The pensioner, as per the scheme of the bank, has to submit a copy of PPO and monthly pension slip. If a pensioner is not maintaining pension account with J&K Bank, he has to submit a statement  of  pension  account  for  last  six months

What is the repayment schedule of the loan for pensioners?

For pensioners, the loan is to be repaid in EMIs (equated monthly installments) till the pensioner attains age of 75 years. In   cases   where   spouse,   children,   siblings   are   made joint Borrowers/Co-Borrowers, the age of the youngest borrower/ co-borrower can be considered for arriving at tenor of loan, subject to condition that his/her contribution to EMI is at least 40%.

What are other specific terms and conditions a pensioner needs to know?

In  cases  where  the  applicant  approaches  the  bank for  a loan facility to purchase land/plot, it will be mandatory for him/her to  declare  by  way  of  an  affidavit-cum-undertaking  that  he/she will  commence  construction  of  dwelling  unit  on  the  said  land/plot within  02  years  and  complete  the  construction  within 03 years  of 1st disbursement.

In cases where the applicant own a plot/land and approaches the bank for a loan facility for construction of a house, a copy of the permission and sanctioned plan/approved construction plan by the competent authority in the name of the person applying for housing loan facility is to be submitted to the bank.

In cases where the applicant wants to obtain loan for purchase of a built house/flat, it is mandatory for him/her to declare by way of an affidavit-cum-undertaking that the built up property has been constructed as per the sanctioned building plan.

Are pensioners supposed to submit third party guarantee as additional security?

Yes. Pensioners procuring the housing loan have to submit third party guarantee of spouse/ legal heir(s), who is/are entitled for family pension along with additional guarantee of one person. This is in addition to the mortgage of housing property for which loan has been obtained.

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