Home Loans for Older Borrowers in Australia

Applying for home loans for older borrowers is always challenging especially when the loan term exceeds retirement age. Although it is illegal for lenders to discriminate based on age when granting a mortgage most Lenders have restrictions.

Mortgage eligibility is not determined solely based on age; rather, lenders consider a variety of factors when evaluating mortgage applications. Here are some key points to consider when applying for home loans for older borrowers:

  1. Age is just one depending factor: Lenders assess an applicant’s overall financial situation, including income, credit score, debt-to-income ratio, and employment history, in addition to age. Older applicants may have more stable finances due to established careers, higher savings, and reduced debt.
  2. Loan term: The term of the mortgage can vary, but it’s common for lenders to offer mortgage terms of 15, 20, or 30 years. If you’re over 50, a 30-year mortgage may not be ideal as it means carrying the loan into retirement age. However, shorter loan terms may be more suitable depending on your retirement plans and financial situation.
  3. Retirement income: If you’re close to retirement age or already retired, lenders may consider your retirement income (such as pension, social security, investments) as part of your overall income when evaluating your ability to repay the loan.
  4. Exit Strategy: Is your ability to pay out your loan balance at retirement.

What are some common exit strategies when applying for a home loan for older borrowers?

Commonly accepted exit strategies for Older Borrowers:

  • Downsizing your property by selling your home and moving into a smaller home.
  • Selling assets such as an investment properties.
  • Make a lump sum payment from Superannuation after you retire.

Tips for Home Loans for Older Borrowers:

You can improve your chances of being approved for a home loan by:

  • A shorter loan term so that the loan is paid out before retirement age.
  • Providing a solid exit strategy if the loan term exceeds your retirement age.
  • Apply with a lender that understands mature borrowers.
  • A larger deposit can improve your chances of getting approved for a mortgage.

In conclusion:

It’s essential to speak with different lenders to understand their specific criteria and to find the best mortgage option that suits your needs and financial situation. Consulting with a Non Conforming Mortgage Broker can also be helpful as they can connect you with lenders who cater to older borrowers and offer suitable terms. Remember that responsible borrowing is crucial at any age, so carefully assess your ability to meet the mortgage payments before proceeding