Retired? Not to worry, you can still get a home loan

The biggest worry that employees on the verge of retirement would be the worry of not being able to spend their retired life in a peaceful house of their own, without having to face the hassles of a rented place. If this is one of your worries, then this article is for you!

As a Government employee or an employee of any reputed company that offers living quarters to their employees, you might not have worried about a place to stay. With constant transfers, you would not have had the inclination or necessity to buy a house unless it was part of your financial plan.

But now on the verge of retirement, you want to settle down in your own house and are looking for loans which help achieve your dream of getting a house. Not to worry, there are schemes for pensioners and those looking to retire soon to get a home loan, read on!

Employment details

Banks give loan only to pensioners who have worked and retired or about to retire from Central or State Government posts, PSU, Defense, VRS, educational institutions and other reputed companies. It is advisable to keep your work-related documents, pension papers and pay slips in order before seeking loans.

Age and loan amount

The eligibility criteria for most banks depends on the age and loan amount and the bank's lending criteria. The maximum loan amount and the repayment period is dependent on the above. Lenders will also look at your credit healthy and your history of handing credit, if you have any past dues you must act on them as soon as possible. The EMI will be calculated in such a way that the loan is completely paid off before the borrower reaches 75 years old. The EMI also should be lesser than 40% of your monthly pension amount.

Type of property

Banks provide loans to retirees only for constructing/repair/renovation of new/existing house, buying the piece of land, purchasing of the ready-made house or flat. Most banks only provide loans for house renovation, expansion or repair for pensioners. Very few give loans for buying the piece of land or buying of the new house.

Monthly income

Your monthly income plays a very important role as the income determines your loan approval as well as loan amount eligibility. Banks have a minimum monthly pension starting from Rs. 5000 per month.

Now that we have discussed the eligibility criteria let me give some tips which can improve your chance of getting better loan amounts at low EMI.

Joint Loans

Taking loans with your wife or son/daughter is a good way of getting better loan amount and lower interest rate. Then your Net Monthly Income(NMI) which will be used to calculate the loan eligibility and EMI will be in the borrower's favor. For example, if the borrower is earning Rs. 40000 per month and his wife are earning Rs.40000 per month then the NMI value is Rs. 80000.  This value will reduce when the borrower starts getting only pension i.e. if the pension is Rs. 10000 per month then NMI is Rs. 40000. Banks generally calculate EMI for only 60% of NMI.

In the case of son/daughter, the loan amount and tenure will be high while the interest rate will be less. Some banks in special cases allow spouse and son/daughter to be co-borrowers which gives the borrower a lot of breathing space.

Using collateral

The other way a pensioner can get good loans is by providing security to the bank. Pledging any fixed deposits, bonds, and gratuity funds or using the existing property as collaterals to get a good loan.


Whatever the method may be borrowers need to make sure they explore all their options before signing up for any loan. Some of the premium banks are coming up with new schemes for pensioners alone. As with every borrowing decision, it is advised that you go through your credit report to understand your current state of financial health.

Check out CreditMantri to get the best loans and options that are right for you and which also does not become a burden on your life savings and spend your life in a pensioner's paradise of your dreams.