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I’ll be retiring at 65, what are my home loan options?

Posted: Tue Mar 19, 2019 11:37 am
by Ricky B
Hi, I’m 55 years old working in a mid-level management position with a construction company. I earn about 90k p.a. I have bank savings of about 40k and another 160k in my super. It seems different banks have different policies for aged borrowers nearing retirement.
I’ll be retiring at 65 so what are my home loan options?

Re: I’ll be retiring at 65, what are my home loan options?

Posted: Tue Mar 19, 2019 1:23 pm
by Otto Dargan
Hello Ricky B. Welcome to the forums.

That is absolutely correct. Different banks have different policies for borrowers that are nearing retirement age.

For borrowers who are 55 years old, almost all lenders require:
  • A written exit strategy.
  • Evidence of your superannuation balance.
  • Other assets that can be sold to repay the proposed debt as part of your exit strategy.
The secret of getting approved is to apply with a lender that has flexible policies.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a loan.

Cheers,

Re: I’ll be retiring at 65, what are my home loan options?

Posted: Tue Mar 19, 2019 2:03 pm
by Ricky B
I’ve heard this term being bandied about. What exactly does an exit strategy have to do with my home loan?

Re: I’ll be retiring at 65, what are my home loan options?

Posted: Tue Mar 19, 2019 6:08 pm
by Otto Dargan
Hi Ricky B,

Banks require proof that you can repay the loan without hardship.

If the loan term extends past your likely retirement age they want to know how you intend to repay the loan after your retirement.

This is where an exit strategy comes into play.

The exit strategy that you provide to the lender can vary depending on your asset position, income and retirement plans. Common strategies include:
  • Downsizing to a smaller home when you retire (not accepted by all lenders).
  • The sale of assets such as shares or investment properties.
  • Lump sum repayments from superannuation.
  • Ongoing income from superannuation.
If no exit strategy is provided then the loan term must not exceed the expected age of retirement.

In your case, your max loan term would be 10 years.

Cheers,

Re: I’ll be retiring at 65, what are my home loan options?

Posted: Tue Mar 19, 2019 7:05 pm
by Ricky B
Oh yeah, that makes more sense.
If I were to shorten the home loan term to 15 years instead of the usual 30 years, would that make more sense?

Re: I’ll be retiring at 65, what are my home loan options?

Posted: Tue Mar 19, 2019 7:20 pm
by Otto Dargan
Hi Ricky B,

It depends. A shorter 15-year home loan term entails higher monthly payments than if you were to go for a longer 30-year term mortgage.

You save on interest over the entirety of the loan term by going with a shorter loan term. If you can afford the higher monthly repayments then it makes sense to go with a shorter time frame.

Speak with one of our experienced mortgage brokers who can assess your situation and present the best options available to you.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.

Cheers,