Guide to home loans when you’re over 50

‍Understanding the Lending Criteria for Older Borrowers

When applying for a home loan, lenders will consider a variety of factors, including your income, credit history, and assets. However, for older borrowers, there are additional considerations that may come into play. For example, lenders may be more cautious about approving loans for older borrowers because they may be closer to retirement and may not have as many years to repay the loan when compared to a younger borrower. Having an acceptable retirement strategy can address this.

Types of retirement strategies

There are several types of acceptable retirement strategies for home loans in Australia, such as:

1. Repaying the loan in full before retirement through regular payments or making extra payments.
2. Downsizing - selling a larger, more expensive home and purchasing a smaller, more affordable one, is a typical way for retirees or older homeowners to reduce their outstanding debts, living expenses and maintenance responsibilities.
3. Using superannuation to repay any residual debt once you’re in the retirement phase – You will still need to demonstrate that you’ll be left with enough to live on throughout your retirement so you’re not adversely impacting your future financial security.
4. Using rental income from the property to cover loan repayments in retirement.
5. Using the proceeds from the sale of the property to pay off the loan in retirement.

It's important to note that each strategy has its own advantages and disadvantages, and it's important to consult with a financial advisor to determine the best strategy for your individual situation.

‍Preparing for a Home Loan Application

To increase your chances of getting approved for a home loan, it is important to prepare thoroughly for your application. This includes:

• Reviewing your credit report: Before applying for a home loan, check your credit report for any errors or discrepancies. If you find any, take steps to correct them.
• Asset position: A lender will want to understand your savings, including any investments and assets you own. This could include cash, shares, property, superannuation or motor vehicles.
• Outstanding loans: Lenders will want to see what your current loan commitments are, including things like home loans, personal loans, car loans, lines of credit and credit card limits.

‍Different Types of Home Loans Available for Older Borrowers

There are a few different types of home loans available for older borrowers in Australia. These include:

• Traditional home loans: Standard home loans are the most common choice for older borrowers as they typically carry the lowest interest rates and have the lowest fees.
• Line of credit loans: Line of credit loans allow borrowers to access a line of credit, which can be used for any purpose. Typically, interest is only charged when funds are used or drawn.
• Reverse mortgages: Reverse mortgages are a less common type of loan in Australia. They allow older homeowners to access the equity in their home. The loan is repaid when the borrower sells the home or passes away.

Tips for Increasing Your Chances of Getting Approved

• Be honest: Don't exaggerate your income or hide any debts. Lenders will find out and it will hurt your chances of getting approved.
• Provide documentation: Make sure to provide all the necessary documentation, including pay slips, tax returns, and bank statements.
• Be realistic: Be realistic about the amount of loan you can afford to repay.

In conclusion, getting a home loan as an older borrower inAustralia can be challenging, but it is not impossible. By understanding the lending criteria, preparing for the loan application, knowing the different types of home loans available will assist you in finding options that meet your requirements and objectives.

At Yard, we specialise in providing home loans to older borrowers. We also realise that many people prefer to speak to us directly, rather than go through the online application form. We assign each caller their own personal loan consultant to answer all your questions and help you through the entire process.

Have more questions about mortgages for mature applicants? Get in touch and our team is happy to chat at a time that suits you!‍