How difficult is it for a retiree to get a home loan?

Any general questions you might have in regards to loans and finance.
Hank W
Posts: 3
Joined: Mon Jul 29, 2019 7:37 pm

How difficult is it for a retiree to get a home loan?

Postby Hank W » Mon Jul 29, 2019 7:38 pm

I am nearing my retirement at 60 years and I intend to move into a smaller home with my wife since all my kids have moved out.
I took out a home loan on my current residence when I was 40 years old, and have not missed a single repayment. My income is 75K p.a and I have around 40K saved up with an additional $150k in my superannuation. How difficult is it for a retiree to get a home loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7600
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How difficult is it for a retiree to get a home loan?

Postby Otto Dargan » Mon Jul 29, 2019 7:55 pm

Hello Hank.

Thank you for reaching out to us and welcome to the forums.

While lenders have stricter policies for mature borrowers, you can still get your loan approved even when you’re 50 years or older by:

  • Having a defined exit strategy.
  • Repaying your current home loan prior to retirement.

You can look into the following exit strategies that best suits your needs and will be acceptable by the lender:

  • Try to reduce your loan term and make sure your loan is paid off before you retire.
  • You have already thought of downsizing and moving into a smaller home. Please note that downsizing is not an acceptable exit strategy with all lenders.
  • Use your superannuation to pay for the loan after you retire. Some lenders accept your superannuation as evidence that you can repay the loan.
  • A source of income past retirement such as shares, bonds or assets that can be sold to pay back the proposed loan is also acceptable with lenders.

Under responsible lending guidelines, banks require proof that you can afford the loan without hardship. Most lenders will not approve your home loan if you’re over the age of 60.

The key is to build a strong case with good evidence that you can afford the loan.

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

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Hank W
Posts: 3
Joined: Mon Jul 29, 2019 7:37 pm

Re: How difficult is it for a retiree to get a home loan?

Postby Hank W » Mon Jul 29, 2019 7:58 pm

Thanks for the tips. My loan will be repaid before I retire, and I am planning to sell my home afterwards. What are my options like?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7600
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How difficult is it for a retiree to get a home loan?

Postby Otto Dargan » Mon Jul 29, 2019 8:05 pm

Hi Hank,

Before you choose to sell your home, look into the following options:

  • Choose to sell first if you have little to no equity or if your property will take a long time to sell.
  • Choose to buy first if you have strong equity and income to hold both properties.
  • You can even buy with a guarantor loan, but your children must be willing to put their property as additional security for your loan.
  • A bridging loan is suitable if you have significant equity but do not have enough income to hold both properties for a long time.
If you choose to sell your property first, then you will have to look for a place to live in before buying your property. Furthermore, there are various costs associated with selling your property. Use our property selling costs calculator to find out how much you will need to pay.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Hank W
Posts: 3
Joined: Mon Jul 29, 2019 7:37 pm

Re: How difficult is it for a retiree to get a home loan?

Postby Hank W » Mon Jul 29, 2019 8:07 pm

Getting a bridging loan sounds like a good plan. How does it work and what should I be aware of?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7600
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How difficult is it for a retiree to get a home loan?

Postby Otto Dargan » Mon Jul 29, 2019 8:38 pm

A bridging loan is basically finance that allows you to buy a new property without having to sell your existing property first.

Banks work out the size of the loan by adding the value of your new home to your existing mortgage then subtracting the likely sale price of your existing home. This calculates your "ongoing balance" or "end debt" which represents the principal of your bridging loan.

There are many benefits of getting a bridging loan:
  • You do not have to wait around to sell and buy your new property immediately.
  • It gives you time to get a better price on your current property.
  • Repayments for bridging loans usually start when you’ve sold your current property. You do not need to worry about paying off both the bridging loan and current loan.
  • Banks and lenders are charging standard variable interest rateson bridging loans.
  • The application fees are usually low and you don’t have to worry about break costs or discharge fees.
  • You can make unlimited principal and interest repayments until you sell your property, helping you save on your interest bill.
  • You can avoid the costs of renting and moving.

However, there are some considerations you need to be aware of:
  • Interest is compounded monthly.
  • You would need to pay for two valuations; one of your current property and the other of your new property.
  • If you do not sell your current property within the bridging period, then lenders might charge you a higher interest rate.
  • If your current lender does not offer a bridging loan, then you will need to switch lenders, which might make you liable for termination fees, break costs, etc. particularly if you’re switching during a fixed interest period.

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,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


Return to “Home Loan Forum”

Who is online

Users browsing this forum: No registered users and 15 guests