Can a veteran on pension get a home loan?

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danny elfman
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Joined: Tue Jul 02, 2013 6:52 pm

Can a veteran on pension get a home loan?

Post by danny elfman »

Hi home loan experts!

I am a veteran and receive a service pension. I am thinking of getting a home loan. My brother, who is also a pensioner, had applied for a home loan but his loan application was rejected by his bank.

I want to buy a two bedroom unit in Lambert Street, Bathurst. The property is worth $230,000. I was wondering if I could get my home loan approved. Does anyone know more about this?

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Otto Dargan
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Re: Can a veteran on pension get a home loan?

Post by Otto Dargan »

Hi danny elfman, welcome to the forum.

It may be possible for you to get a home loan on a Veteran’s Pension. Lenders need proof that your income is regular in order to make regular repayments on the loan. They also need to be sure that the income will continue until the end of the loan term. Even if you provide the evidence, many lenders will not approve your home loan.

However, not all lenders view veteran pensioners in the same way. There are lenders who may approve your loan. For this, you need to be on one of the following types of pensions:
  • Department of Veteran Affairs – Service and Age Pension
  • Department of Veteran Affairs – War Widow’s or Widower’s Pension
  • Other pensions may be acceptable provided that they are considered to be permanent and ongoing.
The amount that you may be able to borrow depends on the amount of the veteran pension that you receive. Some lenders also have age restrictions which needs to be considered while applying or a home loan.

You may be able to borrow up to 80% loan to value ratio (LVR) if you are on a veteran pension. It is also possible for you to borrow up to 95% LVR if you are in a strong financial position. This applies to both home loans and investment loans.

Since a veteran pension is a guaranteed regular income until the end of the loan term, you may be able to get discounted interest rates offered to people with a standard income from a job. You may also be able to get a competitive professional package and basic loan discounts as a veteran.

Cheers,
Otto
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danny elfman
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Joined: Tue Jul 02, 2013 6:52 pm

Re: Can a veteran on pension get a home loan?

Post by danny elfman »

I am not sure what LVR means. Could you tell me more about LVR?

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Otto Dargan
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Re: Can a veteran on pension get a home loan?

Post by Otto Dargan »

Hi danny elfman,

Loan to Value Ratio (LVR) is the percentage of the loan compared to the value of the property that you are buying. Normally, up to 80% LVR is considered to be low risk loans by lenders. As you want to buy a property worth $230,000, you can borrow $184,000 at 80% LVR.

The lower the LVR, the more likely it is that your loan application will be approved. If you want to borrow more, you may need to pay an additional fee for Lenders Mortgage Insurance (LMI). LMI is required if you are seen as a high risk borrower by the lenders. LMI offsets the losses to the lenders which might occur if you default on the loan.

Cheers,
Otto
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P | 1300 889 743
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danny elfman
Posts: 47
Joined: Tue Jul 02, 2013 6:52 pm

Re: Can a veteran on pension get a home loan?

Post by danny elfman »

I think I can put 20% of the property value as a deposit on my loan. You said that I will need to provide proof of my income to the bank when I apply or a loan. What is considered to be the evidence of my income?

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Otto Dargan
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Re: Can a veteran on pension get a home loan?

Post by Otto Dargan »

Hi danny elfman,

The following documents may be considered as proof of your income by the lenders:
  • A current statement from the Department of Veteran Affairs (DVA) showing the name of the customer, frequency and amount; OR
  • A current bank statement showing direct credits that can be identified as government allowance.
If you need more help then you can call us on 1300 889 743 or fill out our free assessment form.

Cheers,
Otto
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P | 1300 889 743
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stace
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Re: Can a veteran on pension get a home loan?

Post by stace »

Hi there,

What are the age restrictions mentioned earlier in this thread? I am 45 years old and want to take out a home loan. I have a decent income from a regular job. Can anyone give me suggestions so that I can increase the chances of my loan application being approved?

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Otto Dargan
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Re: Can a veteran on pension get a home loan?

Post by Otto Dargan »

Hi stace,

Many lenders have stricter lending policies for mature borrowers. They may shorten the loan term so that you can repay the loan before the standard retirement age of 65. This means that the periodic repayments on your loan may be higher than a standard 30 year home loan.

You may need to have an exit strategy in place to prove that you can repay the loan on retirement. You may be able to demonstrate one of the following:
  • The sale of investments and other assets.
  • Lump sum repayments from superannuation.
  • Ongoing income from superannuation.
  • Life insurance policies.
  • Downsizing to a smaller home upon retirement (not acceptable to all lenders).
Home loan applications for people above 35 years of age can be a complicated thing. It is better to contact a specialist mortgage broker to discuss the options available to you.

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

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