Buying a home of your own is the ultimate dream of everyone. Most people prefer going for buying an under-construction property due to various reasons like the ability to pay the down payment at one go.
There are many who do not want to take the risk of default by the builder in handing over possession at the promised time and want to buy a house that is ready to move in the house whether a new house or an old house. There is a misconception in the mind of many people that you cannot get a home loan for an old house and it is only the flat bought from the builder that you get a home loan.This is unfounded, to say the least. You can certainly get a home loan to buy an old house subject to satisfaction of certain other conditions. Let us understand the criteria used by lenders to give a home loan for the old house.
Age of the borrower as well as the age of the property to be financed
While ascertaining your home loan tenure the lender takes into account two factors. First is the age of the buyer at the time of taking the home loan and at the time the loan tenure will expire. Both these should be during your earning phase.
For salaried, the home loan lenders grant a home loan for a tenure that does not stretch beyond your age of retirement, which is generally 58 years unless your retirement age in your present job is 60 years. However, since most self-employed people like businessmen, doctors, lawyers, CAs work till extended age, the lenders grants you a loan up to 65 years of age.
It is not the only age of the house, at the time of granting the home loan, which is important but also the house’s physical condition when granting the home loan, which is vital for the lender to give you a home loan. The tenure of the home loan will depend on the physical condition and expected balance life of the house as well as your expected balance earning life.
While granting the home loan the lender wishes to ensure that the house would be in proper shape and condition not only at the time when the home loan is sanctioned but also at the time when the home loan tenure expires.
So very for an old building/flat, the lender may not give you a loan for an extended period as 40 years (which is presently granted by a few lenders like Oriented Bank of Commerce) if the building is already 35-40 years old but may be willing to give the home loan for shorter tenure say 5 years to 10 years.
I had taken my first home loan in 1994 for a building which was constructed in 1963 meaning for a building which was 30 years old and my buyer was able to get a home loan on the same flat in 2004 meaning for the flat which was 40 years old that too for a tenure of 20 years.
Before granting the home loan for the old building, flat the lender will get the structural audit of the flat and building done so as to ascertain the present age as well as the strength of the house to last beyond the home loan tenure being considered by them It is only after the structural engineer approves that you will be able to get a home loan for the very old building.
While giving the home loan for old flats the home loan lender may also verify whether a society has been formed and whether the conveyance for land has been done in favor of the housing society or not. So unless the conveyance of the land has happened in favor of the society, you may not get a home loan as in case of complete destruction of the house, you will not have any legal ownership over the land and the matter may get litigated.
Even for a property that is going in for redevelopment, you may get a home loan provided the builder is also made a party to the home loan and is willing to assure and ensure that the interests of the home loan lender are fully protected.
So unless there are compelling reasons like the property being in very dilapidated conditions, the lender will not refuse the home loan to you generally for an old property. It is not the age of the property that will affect whether you will get a home loan or not but other factors that will determine whether you will get a home loan for an old property.
So if you like an old property and want to buy it with the help of a home loan, do not worry, in all probability, you will be able to get a home loan to have it.