Retirement Age Home Loan
Mortgages for over 50s
Did you know that many banks have lending policies that restrict the borrowing capacity of mature borrowers?
If you’re over the age of 40, the lender may shorten your loan term so that your home loan is repaid before the standard retirement age of 65.
For those over the age of 50, there is no hard and fast rule to getting approved for a home loan and you may required to provide extensive documents and an exit strategy. Read on to find out more.
How to get a home loan over 50 years of age
The secret to getting your home loan approved is to apply with a lender that has flexible policies.
Following these three golden tips if you’re 50 years or older:
- You must have a defined exit strategy (see below – exit strategy).
- You must repay the loan prior to retirement (see below – retirement rule).
- You should apply with a lender that understands and accepts mature age borrowers.
Do you need help with your loan approval?
Please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will contact you to discuss your situation.
How can you get your home loan approved?
Did you know some of our banks will allow you to borrow even if you’re over 50 yrs old?
If you can demonstrate an ability to repay the loan before you’re 75 years old, they will consider your application no matter your age!
For example, if you needed to borrow $300,000 and were 50 years old, the standard 30-year mortgage term could be reduced to 25 years and your loan would be approved.
Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will assist you in applying for a mortgage.
Applying for a home loan over the age of 65
If you’re still earning an income from shares, a business, rent or if you’re still working, you may be able to get approved.
However, we’ll need to show the lender that your income is ongoing.
If you’re still working, we may need to prove that you can continue to work until the home loan is repaid.
If you’ve already retired and have no ongoing income, you may be able to apply for seniors equity release.
This type of loan is designed for elderly borrowers who have significant equity in their home.
No repayments are required and the interest capitalises until the property is sold.
Because there’s no requirement to repay, you don’t need to comply with the retirement age policy or prove your income.
Please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will help you apply for a loan today!
Retirement age rules
Different banks have different policies for borrowers that are nearing the age of retirement:
- 35 years old: Lenders will consider your profession and likely retirement age and they may shorten your loan term.
- 45 years old: You may be required to show superannuation statements or demonstrate that you have an exit strategy in place to repay the loan when you retire.
- 50 years old: Most lenders will allow you to borrow but some may decline your application due to your age.
- 55 years old: Almost all lenders will require a written exit strategy, evidence of your superannuation and other assets that can be sold to repay the proposed debt.
- 60 years old: Most banks are likely to decline your application due to your age. However, if you’ve got a continuing source of income past retirement, or have assets you can sell to help repay the loan, then your loan may be approved.
- 65 / 75 / 80 years old: You’ll only be able to borrow money with either a seniors equity loan (reverse mortgage) or with a standard loan, if you can prove an ongoing post-retirement income.
Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will tell you if your age will stop you from borrowing.
More often than not, we can find a lender that will accept your situation just by building a strong case with good evidence.
Bank policies for older borrowers
Banks require proof that you can repay the loan without hardship.
If the loan term extends past your likely retirement age, then the bank has not met their responsible lending obligations under the National Consumer Credit Protection Act (NCCP).
However, the NCCP Act is open to interpretation!
For this reason, each bank has their own requirements and rules for older borrowers.
Many of the common policies include:
- If your owner occupied property (home) is the sole security for the mortgage, 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 lenders, from 65 to 75 years of age.
- Many lenders will not approve a loan for someone over a particular age, particularly if you’re over the age of 60.
Your mortgage exit strategy
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 reach retirement (not accepted by all lenders).
- The sale of assets such as an investment property or shares.
- Lump sum repayments from superannuation.
- Ongoing income from superannuation.
Check out the exit strategy page for an investment exit strategy example.
Retirement age and property in Australia
A January 2017 survey by Roy Morgan found that the average of Australians intending to retire is 61 years, up from 58 in January 2014.
Much of this has been driven by changes to pension eligibility and superannuation rules.
In a time of high cost of living and economic uncertainty, many Australians are forced to work longer.
This is despite the fact that the average gross wealth of those intending to retirement in the next 12 months at $286,000, up from $276,000 in 2014.
These figures includes superannuation but exclude equity in an owner-occupied property.
Most interestingly, superannuation accounts for around 62.9% of gross wealth, up from 57.6%.
The great news if you own an owner-occupied property is that they tend to hold much more value compared to retirement savings.
Equity from your home doesn’t impact the age pension asset test.
In addition to this, from 1 July 2018, individuals aged 65 or older will be able to make non-concessional (after-tax) super contributions of up to $300,000 using proceeds from the sale of their home.
This is a great incentive if you decide to downsize but you should speak to your accountant about the best strategy that works for your retirement plans.
The strength of the Australian real estate market is helping to fund retirement!
Contact a specialist mortgage broker
Do you need help with your mortgage?
We specialise in helping people over the age of 50 get approval for a home loan.
Please contact us on 1300 889 743 or fill in our free assessment form today.