05 MAY, 2021

Mr Gupta is an ex-army officer who served in the Indian army for many years. Post-retirement, he decided to move to a hill station to live peacefully for the rest of his life. However, when he tried purchasing a house in a quaint city up in the hills, his savings fell short for the kind of house he was looking for. Although, he knew that he could purchase his dream home with a home loan, he was unsure if a retired person can do so. On enquiring, the bank officials informed him that he can avail a home loan as he receives pension.

If you plan to buy your dream house now that you are retired or wish to buy one after retirement, , this guide can help you.

Tips to Increase the Chances of Home Loan Approval

  • Opt for a joint loan
    From the bank’s perspective, the biggest worry while giving a high value loan like a home loan to a retired person is the repayment. Getting a younger co-applicant can reduce the risk of default for the bank. A joint home loan can also help you get a higher loan amount and longer tenure. In a joint home loan, lenders consider the income of both applicants while processing the application. As income is an important eligibility criterion, having a co-applicant increases your home loan eligibility significantly. Experts recommend that you should take a joint loan with a family member who has a good credit score and a stable income.
  • Check your credit score
    The credit score is a numerical representation of an individual’s creditworthiness. A credit score of 700 or above is considered to be good one for home loan approval. If you plan to take a home loan after retirement, ensure that you have a good credit score. If your loan application is rejected due to a poor credit score, it could further deplete the score, thus affecting your loan eligiblity in future as well. So, before you fill the loan application form, check your latest credit report and credit score to ascertain your eligibility, and thereby avoid rejection.

Opt for a lower Loan to Value ratio (LTV)

LTV is the ratio between the loan amount and the value of the property. Keeping a lower LTV ratio helps enhance your eligibility as it suggests a lower requirement of loan, which in turn, increases the chances of loan application approval. For this, you might have to pay a higher down payment. A lower LTV acts as an assurance for the lender that you are capable of repaying the loan.

Things to Keep in Mind while Availing a Home Loan after Retirement

  • Lenders usually lend money to pensioners for a short tenure of 10-15 years. In some cases, the tenure can be equal to number of years left to reach 75 years of age for the borrowers.
  • The lender could have certain benchmarks for approving the loan application of pensioners. For example, many lenders require the applicants to be retired from the service of the state or central government, PSU, defence, etc.


While you are availing a home loan after retirement, it is crucial to do thorough market research. Due to the uncertainty in life expectancy and income loss, lenders could be skeptical in approving your loan application once you retire. But, if you have a good credit score and meet the other eligibility criteria, it could get easier.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.