Home Loans For 65-Year-Olds – Summary:
|Goal||To purchase an owner-occupied property.|
|Problem||A 65-year-old (near retirement age) newly self-employed psychologist with 8 months of business financials.|
|Security||Fully detached house in Armidale, NSW|
|LVR and Term||80.00% LVR LVR (loan to value ratio), 20-year loan term|
|Annual Income||$125,472 (estimated)|
|Solution||Work out an exit strategy to satisfy the retirement age credit policy and verify self-employed income with alternative income documents.|
Can A 65-Year-Old Get A Home Loan? The Story
Jane approached one of our specialist mortgage brokers, Mandy Shrestha, looking to buy a house.
She had opened her own psychology practice eight months ago after finishing her training and general registration. The practice was booming, as there were very few other psychologists to meet the high demand and she had a reliable source of referrals from local medical clinics.
However, as banks generally require at least two years’ financial statements for self-employed borrowers, the list of potential lenders for Jane was short.
Additionally, because she was 65, near retirement age, she would need to provide a strong exit strategy detailing how she planned to pay off the loan as she approached and entered retirement, to comply with lenders’ retirement age credit policies. Lenders like to see lots of assets and property in borrowers nearing retirement, which Jane had none of so that further limited her choice of potential lenders.
Home Loans For 65-Year-Olds: The Assessment
Home Loan Experts mortgage broker Mandy, having helped borrowers get approval in similar (and far worse) credit situations, knew exactly how to proceed.
Before anything else, she did a full assessment of Jane’s overall financial situation by collecting documents verifying income and credit reports, and by carrying out serviceability calculations.
After a thorough assessment, the loan at first seemed impossible. But Mandy knew there had to be a specialist lender that could potentially help.
Home Loans For 65-Year-Olds: The Solution
Mandy started sending out loan scenarios to different lenders, including CBA, Pepper, Resimac and more. Most responded with different variations of ‘No, at this moment, we cannot help with this deal.’
But Home Loan Experts has a panel of more than 50 lenders. Sure enough, one of our specialist lenders eventually responded positively to the loan scenario. But they did require additional supporting documents and a higher credit review (this is where a senior credit assessor steps in to assess the application and is usually only done for complex loans).
Mandy first needed the lender to accept the annualised income estimated from Jane’s earnings over the eight months since she established the practice. Without this, serviceability would be an issue. The only way to get the lender to accept this annualised income would be to obtain an accountant’s letter confirming it.
Secondly, Jane’s age meant she would need to draft an exit strategy detailing how she would repay the loan if she were to retire before the loan term ended. As part of the exit strategy, Mandy highlighted for the lender a number of factors that mitigated the risk of letting her client borrow money: Her skilled profession in a high-demand industry meant she had an ample ongoing patient base with a high cashflow. Due to her high income, she could service the loan within 10 years, even though her loan term was for 20 years. Her age meant she had access to her superannuation, which could be used for the monthly loan repayments if necessary.
Finally, her planned retirement age of 75 meant she could comfortably repay the loan by retirement if needed.
This exit strategy, combined with an accountant’s letter verifying Jane’s income, made our broker confident the loan application would be accepted. She gave the lender both documents and only once she received the green light from the selected lender’s business development manager, did she submit the application.
Jane’s loan was processed and promptly approved.
To top it off, once Jane has a full year of financials and tax returns, Home Loan Experts can help her move to a major lender if she so chooses.
To surmise, Home Loan Experts mortgage broker Mandy:
- Performed a full assessment of Jane’s overall financial situation by collecting documents verifying income and credit reports, and by carrying out serviceability calculations.
- Sent out the loan scenarios to different lenders, CBA, Pepper, Resimac and others.
- Got the lender to accept an accountant’s letter for income verification instead of tax returns.
- Drafted a solid exit strategy detailing how she would repay the loan if she were to retire before the loan term ended, to satisfy the requirements for retiree borrowers.
- Got the loan formally approved.
Home Loans For 65-Year-Olds: A Happy Ending
When it was all said and done, this was what Jane had to say:
Call us on 1300 889 743 or fill in our free assessment form to start your home buying journey today.