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Can I get a home loan at 55?

Posted: Fri Feb 08, 2019 1:42 pm
by David S
Hi Otto, I’m almost 55 years old and looking for a home loan. I have around $120,000 in superannuation and a few investments in shares. I’ve been hearing that banks are very hesitant to approve home loans to people over 55. Can I get a home loan at 55?

Re: Can I get a home loan at 55?

Posted: Fri Feb 08, 2019 2:30 pm
by Otto Dargan
Hello David. Welcome to the forums.

While it’s true that banks generally have stricter lending policies for borrowers over the age of 50. You can still qualify for a home loan with lenders who have flexible policies.

Here are some tips for borrowers over 50:
  • You must have a defined exit strategy.
  • You must repay the loan prior to retirement (retirement rule).
  • You should apply with a lender that understands and accepts mature borrowers.

Let our experienced mortgage brokers help you with your loan approval. Please call us on on 1300 889 743 or you can fill in our free assessment form.

Cheers,

Re: Can I get a home loan at 55?

Posted: Fri Feb 08, 2019 4:05 pm
by David S
I’m a little confused regarding the exit strategy, can you please elaborate on this?

Re: Can I get a home loan at 55?

Posted: Fri Feb 08, 2019 4:56 pm
by Otto Dargan
Hi David,

Sure. If a borrower is close to the retirement age, lenders typically require you to provide an exit strategy for how you plan to repay the home loan.

The banks may knock back your home loan application if they deem your exit strategy plan high risk or unviable.

Your exit plan will depend on your income, asset position and retirement plans.

Common strategies include:

  • Downsizing to a smaller home when you reach retirement (not accepted by all lenders).
  • The sale of assets such as investment properties or shares.
  • Lump sum repayment from superannuation.
  • Ongoing income from superannuation.

It is best to speak with your accountant about an exit strategy that works for your financial situation.

Cheers,

Re: Can I get a home loan at 55?

Posted: Fri Feb 08, 2019 6:29 pm
by David S
That sounds very doable. One final thing regarding the repayment of the loan before retirement. I’m planning to retire at 65, is that going to be a problem?

Re: Can I get a home loan at 55?

Posted: Fri Feb 08, 2019 6:31 pm
by Otto Dargan
Hi David,

Each bank has its own requirements and rules for older borrowers under the National Consumer Credit Protection Act 2009 (NCCP Act).

Many of the common policies include:

  • If your owner-occupied property is the sole security for the mortgage, then you must provide a written exit strategy.
  • Downsizing to a smaller home is not an exit strategy that is accepted by most lenders.
  • If no exit strategy is provided then the loan term must not exceed the expected age of retirement.
  • The accepted retirement age varies between 65-75 years of age.
  • Many lenders will not approve a loan particularly if someone is over the age of 60.

Just to be safe, give one of our experienced mortgage brokers a call to make sure you can get approved with the right terms.

Please call us on 1300 889 743 or you can fill in our free assessment form.