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Am I Too Old to Get a Loan?

Funding OptionsHome Loans Am I Too Old to Get a Loan?
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Am I Too Old to Get a Loan?

Post-retirement age can be an issue when it comes to getting a loan. But Funding Options managing director Dom Cassisi explains how to work around the restrictions.

Why do some lenders have age restrictions?

It’s actually illegal for them to discriminate on the basis of age. However, banks are charged with the responsibility of making sure their borrowers only take out what their circumstances can allow.

This means that there is no set age limit for taking out a home loan or other finance deal, but your bank will carefully examine your situation to see if you can handle a loan.

Loans are serious

Taking out a mortgage or loan means time. You could need up to 30 years of regular repayments to pay off your loan. If you successfully take out a loan after retirement, this means that you’re certain of living on and making payments for another 20-30 years. Most lenders feel that it’s difficult to make that sort of commitment and that’s why they may not accept your application.

Additionally, should the worst happen while you’re still making repayments, the lender could get caught up in the tangle of property ownership issues. Banks prefer to avoid contracts that have a risk of leaving business unfinished.

Finally, there is the question of whether your retirement income will actually cover all of your costs.

How to work around limitations

While lenders cannot deny an application on the basis of your age, they will look at other circumstances in your life. Make sure that all such areas are up to their standards.

A few important tips include:

  • Prepare a transparent and detailed repayment plan before applying
  • Have a large deposit ready to go
  • Prove your reliability with a great credit history
  • Show that you have sufficient balance in your super fund
  • Releasing equity on your home is very handy if you’re already retired
  • If you are working, create a plan for repaying your loan before retirement

Some lenders are very experienced with lending to mature borrowers. Banks will even vary in terms of what they consider “retirement age.” A potential lender may also shorten the term of the loan repayments. This is where utilising the market knowledge of a finance broker can help you find the loan that will work for your circumstances.

It’s ideal to create your “exit strategy” before applying for the loan. This means drafting a timeline for repaying your loan as soon as possible and then sharing your plans with the lender.

What your lender is interested in is your ability to make good on your word to pay back. The more thorough you are in demonstrating your capability to pay, the greater your chances are of securing a loan.

How to work around limitations

While lenders cannot deny an application on the basis of your age, they will look at other circumstances in your life. Make sure that all such areas are up to their standards.

A few important tips include:

  • Prepare a transparent and detailed repayment plan before applying
  • Have a large deposit ready to go
  • Prove your reliability with a great credit history
  • Show that you have sufficient balance in your super fund
  • Releasing equity on your home is very handy if you’re already retired
  • If you are working, create a plan for repaying your loan before retirement

Some lenders are very experienced with lending to mature borrowers. Banks will even vary in terms of what they consider “retirement age.” A potential lender may also shorten the term of the loan repayments. This is where utilising the market knowledge of a finance broker can help you find the loan that will work for your circumstances.

It’s ideal to create your “exit strategy” before applying for the loan. This means drafting a timeline for repaying your loan as soon as possible and then sharing your plans with the lender.

What your lender is interested in is your ability to make good on your word to pay back. The more thorough you are in demonstrating your capability to pay, the greater your chances are of securing a loan.

Get professional advice

You’re not too old! Being close to or past retirement age is no reason to give up your dream.

Let us help you realise those plans. Plan a visit to our team here at Funding Options so that we can talk about finding the loan that’s perfect for you.

– Dom Cassisi, Managing Director

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