How seniors can secure a home loan
Applying for a mortgage is never easy, and as you get older, there are specific challenges to overcome.
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As the population ages, an increasing number of seniors are considering getting a home loan. Their reasons include downsizing, moving closer to family, refinancing an existing loan, or even purchasing an investment property.
However, the path to securing a loan in later life has a few hurdles, primarily due to lenders’ concerns over the borrower’s repayment ability during the loan term.
Before applying for a loan, it’s crucial for you to assess your savings, income, credit history, super, and other investments. Lenders will scrutinise these to determine your loan eligibility.
Be aware that various other loan products are available, including personal loans, reverse mortgages and lines of credit. Do your research first to determine if a home loan is what you really want.
Once you know that, gather all necessary documents, including proof of income, savings, assets, and any debts. This will streamline the application process.
At this point it’s prudent to seek professional help. Financial advisors and mortgage brokers may be able to offer invaluable advice tailored to your specific circumstances, guiding you through the application process.
You should be aware of the potential barriers to getting a home loan, which include:
Length of loan term: Lenders are often hesitant to approve long-term loans for seniors, fearing that the term may outlast the borrower's ability to repay.
Income stability: Retirement incomes can be seen as less stable than employment income, making lenders wary of a senior’s ability to maintain regular loan repayments.
Savings and credit history: A lack of substantial savings or a poor credit history can be significant barriers to loan approval for seniors
Home Loan Referral Program
Say hello to flexible, affordable home loans with more features and competitive rates with National Seniors' partner, Auswide Bank.
Whether it’s a first home or an investment property, Auswide Bank Lending Consultants are available to help you, your family member, or someone you know each step of the way.
Opt for a shorter loan term: This may reassure lenders of your ability to repay the loan within a reasonable timeframe, although it may mean making higher monthly repayments.
Consider a smaller loan: Applying for less money may reduce the lender’s risk and increase the likelihood of approval. This may mean looking at more affordable properties or contributing a larger deposit.
Build a big savings buffer: Having substantial savings not only demonstrates financial responsibility to lenders but also provides a buffer in case of unexpected expenses, making you a less risky borrower.
Secure an extra income stream: If possible, find a new ‘gig’ that can top-up your income. This may bolster your loan application by demonstrating financial stability beyond traditional employment.
Government programs: Explore state and federal government programs that may assist you in securing a home loan. These may provide valuable support in meeting lender requirements.
For example, while it may be regarded as something for young people, the First Home Guarantee does not specify an upper age limit for applicants. It’s available not just to eligible home buyers, but to eligible previous homeowners who haven’t owned a property in Australia in the past 10 years, subject to meeting all other eligibility criteria for the Scheme.
Some states offer first homeowner grants that are available only to people who have not owned property previously.
In conclusion, securing a home loan as a senior may have some challenges, but it is possible.
By understanding the barriers and taking steps to address them, you can significantly improve your chances of loan approval.
The keys to success are to do thorough research, consider your options carefully, and seek professional advice.
Disclaimer: Where you enquire about a home loan, National Seniors Australia Ltd ABN 89 050 523 003 will refer you to Auswide Bank Limited ABN 40 087 650 060 Australian Credit Licence 239686 (Auswide Bank) for the purpose of applying for credit. Auswide Bank is the credit provider. If you are approved for a home loan, National Seniors Australia will receive a referral fee from Auswide Bank of the higher of $150 or 0.30% of the total loan amount. Approval of credit is subject to Auswide Bank's eligibility, lending and credit criteria. Auswide Bank is a panel lender for the Home Guarantee Scheme. Eligibility criteria apply. If the Scheme places for non-major panel lenders are utilised (or taken up) in a financial year, standard lending approval criteria, including the need for LMI where appropriate. Fees, charges, terms and conditions apply. National Seniors Australia is not a credit representative of Auswide Bank and is unable to assist you with your credit application.
