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LIC is a name that has great recall value and trust among many generations of Indians. They were among the first entrants in the life insurance business. Having conducted it with integrity and ethics, they ventured into other areas of finance. LIC housing finance is the largest housing finance company in India. The company was founded with the perspective to provide long term finance to individuals to enable them to realize their dream of buying their home.
The company provides finance to purchase new and existing properties. Further, the finance is not limited to residential property alone. Individuals can apply for loans to purchase commercial spaces, clinics, hospitals, nursing homes, laboratories etc.,
LIC home loans are extended to individuals who have crossed the age of 50 years. The repayment of home loan has to be made before the age of 70 years. The loan is extended even post retirement for the individual. However, there is a need to provide evidence of income stability post – retirement which could be in the form of pension, housing rent or any other source of income.
The interest rates on the housing loan extended by LIC housing finance are extremely competent and are offered at nominal rates keeping in mind the kind of applicants for this specific scheme. The applicant here can be an individual who has crossed the age of 50 years, there can be more than 1 borrower for the same loan – all the applicants in such a case should be over 50 years.
There are two categories under which the applicant can file his documents –
One has to check the eligibility criteria before applying for the loan. This reduces the possibility of rejection. Repeated loan rejection can lead to lower credit score which can impact all future loan approvals. It could also potentially affect the interest rate applicable on the home loan.
The purpose of the loan should be to either buy, construct or create extension for the existing house or apartment. The interest rates on these loans are lower than the regular home loan schemes. There is a requirement to submit a promissory note that the whole loan amount or atleast 30% of the loan value or a part of the loan value as fixed by the area office will be paid back from the retirement income. This is a mandatory document. There is a need to attach documents which support the income earning ability. Any outstanding amount should be settled using pension income. The borrower will be required to settle the loan amount partially, the amount of principal that needs to be paid back at the time of retirement will be calculated based on the pension money the applicant is entitled to post – retirement.
The applicant should be aged 50 and above, he should be in service at the time of application. The applicant will be eligible if he has some pension scheme which he has prepared or employer has planned post retirement. The pension scheme should be able to support the applicant with his household requirement and EMI payment. The applicant can also avail the voluntary retirement scheme (VRS) post application of the loan. Partial amount received as settlement will be used to pay off the loan to the extent that the EMI becomes manageable post retirement.
The maximum loan tenure allowed under the LIC home loan for pensioners (before retirement) is 15 years. However, the loan has to be paid in full by the time the individual attains 70 years of age. Hence, the maximum tenure can be 15 years or the difference between 70 years and current age of the applicant – lower of the two.
The purpose of the loan borrowed should be construction, purchase or extension of apartment / residence. The home loan can be borrowed for purchase of new home or existing home. The loan is not extended for internal furnishings / fittings of the house in this category. The interest rate is very nominal as compared to the regular home loan schemes available with LIC. In this loan scheme the commutation of pension or any part of it is not permissible in this scheme. Having an underwriter is allowed as long as approved by LIC.
Any individual who is past the standard retirement age of 60 years is allowed to apply for this category of loan. There has to be proof of steady income, essentially a pension scheme should be established which is likely to flow throughout the term of the loan.
The maximum term allowed for the loan is 15 years, the complete loan should be paid before the applicant attains the age of 70 years. Hence, the maximum tenure can be 15 years or the difference between 70 years and current age of applicant – lower of the two.
The standard set of documents are required for applying for LIC home loan for pensioners. The below list provides an overview of the requirement for applying home loan under the LIC home loan for pensioners scheme.
Form 16 / ITR (if applicant is applying under before retirement scheme); proof of pension scheme post retirement
Pension documents (if applicant in applying under post retirement); proof of pension scheme till the end of loan tenure
Bank statement for past 6 months
Apart from this, there is a need to submit property documents which includes (but is not limited to) –
EMI refers to the equated monthly instalment payable on home loan borrowed under the LIC scheme. The EMI is a combination of interest and principal amount. This is the amount that needs to be set aside on a monthly basis from the monthly income (incase the applicant is applying under category ‘before retirement’) or pension income (incase the applicant is applying under category ‘after retirement’).
The LIC housing finance website itself offers an EMI calculator which will capture very basic personal details, income / pension details, loan tenure, current age, loan value and will return the approximate EMI to be paid on a monthly basis. The EMI is only an approximate and does not reflect the actual amount. Typically, the loan value extended under this scheme is maximum of 75%-85% of the property value, subject to the repayment ability of the individual applicant. The applicant has to assess his ability to repay the home loan given his pension income.
1. What is the minimum and maximum age to apply for the home loan under the LIC home loan for pensioners scheme?
The minimum and maximum age for LIC home loan for pensioners scheme is 50 and 70 years respectively.
2. Is it mandatory for the applicant to have a steady pension scheme to avail home loan under the LIC home loan for pensioners scheme?
Yes. The applicant should be able to establish a steady income stream in the form of pension for the entire loan tenure.
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