Don’t let age be a barrier as it is definitely possible to take out a loan regardless of how old you are.
Generally speaking, lenders do view mature aged mortgage applicants as higher risk borrower so they have stricter lending requirements.
It’s a good idea to be aware of what these are so that you’re well prepared when it comes to applying for a mortgage.
To begin with, let’s take a look at reasons why you may want to apply for a home loan later in life as lenders will take this into consideration.
- Renovations or upgrades: You may have lived in your home for several years and decided that it’s time to move on. In order to do so, you may need to add to your home loan or take out a new one.
- Debt consolidation: Refinancing allows you to consolidate debts such as car loans, credit cards or personal loans, which could save you money.
- Life changes: Has your family situation changed? Perhaps your family has grown and the children have grown up and left the family nest. A change in circumstances is a common reason to take out a new loan.
Regardless of age, lenders always look at your current financial situation to assess your home loan application. Lenders can’t discriminate on age, but if you’re mature aged and close to retirement, they will want to know you have a plan for how you will support yourself financially.
In addition, they may require you to demonstrate an exit strategy that outlines how you will pay off the loan or prove you can service the loan during retirement.
You can minimise the time you’re in debt by asking for a shorter loan term.
It’s important for you to work out what your income streams will be when you retire and whether that will allow you to pay off a home loan. Some examples of income may include: your superannuation; revenue from a diversified share portfolio and other assets. Whatever the income is, ensure it’s sustainable and consistent in order to prove you can continue to service the loan in retirement.
You should not let your age be a deterrent to applying for a home loan. Your local Mortgage Choice broker can take the stress out of the process by exploring your options and finding the right product for your financial situation.