Tips for Older Australians Taking on a Mortgage
You may be surprised to know that not all first-time buyers are young people. With the surge in property prices, higher deposit requirements, and fierce competition, News.com.au stated that the typical first home buyer in 10 years will be 40-50 – first home buyers today are primarily in their 30s, 40s and 50s. Many property investors are older still.
Despite older home buyers being a rising trend in the property market, securing your first home can be tricker the older you get. There is no age discrimination from lenders, however, they do hold a responsibility to ensure you can make the repayments for the duration of the loan, without financial hardship.
The prospect of paying a 30-year mortgage term well into your retirement incurs an undeniable level of risk to the lender – to counteract this, some lenders have introduced age limits to taking out a home loan.
As an older person, how can you get your home loan approved?
Save a bigger deposit
With a bigger deposit, your loan term could be shorter, or your repayments could be more manageable as you approach retirement. Having a larger deposit saved will demonstrate financial discipline to the lender, who in turn may be more willing to provide a loan.
Provide financial evidence
As well as the usual documentation of income and assets, it could be prudent to provide extra proof of finances, like any large superannuation you might have. If you have previously owned a home and paid off the mortgage, showing this could lower your risk in the eyes of the lender.
Be wary of your credit history
Whatever your age, you should always plan ahead and get your credit history in shape before applying for a home loan.
Provide an exit strategy
If your loan term will exceed the general retirement age, then you will probably need an appropriate exit strategy to prove that you can continue to pay your mortgage when you retire. Whether that’s the selling of other assets like property or shares, the ability to reduce your loan term, or a strategic repayment plan from a superannuation payout. Not all exit strategies are accepted, so it’s important to talk these through with your Lending Specialist.
It’s also crucial to note that an exit strategy isn’t in place to stop older people getting a home loan. Taking out a home loan is at yours and the lender’s risk, so you should always ensure long-term plans are in place before taking on a large financial commitment.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
It’s not unthinkable to get a home loan when you are older, but you do have to be well-informed about it. If you are unsure of what your next step should be, speak to one of our Lending Specialists and we can help you with your home-owning journey. You can use our calculators to find what’s the best loan for you.