Getting a Home Loan After 50

Once you reach a certain age range, getting a home loan can be tricky. That age range usually falls somewhere around 50. While it can be a challenge, being prepared can help you maximise your chances of securing the loan you need to achieve your goals. 

There are two major parts of the equation when it comes to getting a home loan if you fall into this age range: loan serviceability and your exit strategy. 

Serviceability

This is simply your borrowing capacity. Servicing is, and has always been, a deciding factor when it comes to obtaining a home loan. Now, however, the way lenders assess servicing involves a deeper and more conservative approach. They are factoring in more detailed living expenses and this now includes discretionary spending. Other debts are tending to be expensed at a higher level than in previous times. 

To maximise your servicing ability, keeping other debt to a minimum - including credit card limits - will help. Being mindful of your expenses prior to applying for a home loan will also assist. This will be useful in a number of ways, including allowing you to save more and as well as showing the lender via your bank statements what your actual expenses are.

Exit Strategy

You exit strategy is how you plan to have the loan either repaid in full or be able to cover the repayments when you reach retirement age. The idea is that you will have enough assets outside the family home to able to pay the loan out at retirement, or have sufficient retirement funds to maintain the repayments there after.

Your exit strategy can come from superannuation funds or personal funds, whether that be from shares, cash, property or other forms of investment. As long as you can show that you will have sufficient assets outside the family home to be able to liquidate and pay your mortgage at retirement age, lenders will generally consider your case. 

Planning to sell you principle place of residence and downsize is often not acceptable. There are, however, some lenders who will consider this scenario if the home is of significant value and it is reasonable to expect you to find a suitable downsized home. 

If you cannot demonstrate sufficient funds to be able to clear the loan after retirement, the loan term will need to be reduced so that it is finalised prior to retirement age.

Knowing your options before you proceed is your best plan of attack. Working with a mortgage broker can help you navigate through your situation and be prepared when you commence your application. Lenders are now more risk adverse than ever and we can expect things to be tight for the indefinite future. Contact us to see how we can help you reach your goal.