I had a person call me recently looking to buy a house I am selling via a wrap. He is earning $100,000 a year. He has a decent deposit and a steady job. My concern is that he is 59 years old and when it comes to refinancing in a few years he may struggle. I beleive that the banks are not allowed to discrimate on issues such as age/religion etc but can someone who knows these things tell me if being 59 is going to reduce his borrowing potential…
Realistically he has a job for as long as he likes… but surely the banks have some modelling that would restict things here… maybe they would just lend less… or require income protection insurance…
All thoughts and comments appreciated…
Greghi, just wanted to let you know my mother had no trouble getting a home loan last year at 72! She went through Home-start cetainly not for everyone however, at least she was able to get a new place of her own after her and her partner split.It has now increased in value by $30,000 so beats paying rent.
wanting more (but about to change my name…)Hi Greg,
I would have thought that if he doesn’t refinance then you are better off as you are still making positive cashflow.If you are worried about realising the premium at the exit end, then maybe you could reduce the selling price and increase the interest rate so as to make more during the wrap than at the end (ie: refinance).
[drummer]lifexperience
Hi
I have heard one lender say they just gave a 30 year loan to an 89 year old!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Just ask him the question – i.e. what does he plan to do? What will he do when he retires? Who knows, he may be entitled to a good pension which will allow him to continue making the repayments.
Most lenders would look at the applicants asset base. If its stong then age is less important.
Cheers
Stu
Terry,
Seriously, how does a 30-year loan to an 89-year old person work?
kay henry
Kaye,
The average loan lasts 7 years. This is because people sell up, refinance or repay the debt.
Should the mortgagee pass away then the mortgage will be dealt with by the estate – regardless of the age of the deceased.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Simon. I thought it was more like 3 years!?
Kaye, the man may live to be 119 years old!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Maybe the average house changes owners every three years – you are probably right mate!!
Even more reason why age shouldn’t matter!
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I just realised that this potential client of Greg’s is probably going to live in the house and the loan would therefore be covered by the UCCC. Under the UCCC, borrowers must demonstrate that they will have the ability to service the loan. So, I don’t know, the major lenders may be concerned with how he is going to keep repaying the loan if he is going to retire in a few years. If it was an investment property he would have rent coming in to cover it.
I have never seen it happen, but maybe they could argue this line.
But then again, retirement is not compulsory anymore!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Grreg,
Income protection insurance (for the ones I looked up) only provides 75% of income and only to the age of 65.
kay henry
Age matters to some and not other lenders. I’d be asking myself the same questions. I have refinanced a deal with two pensioners, aged 62 & 67 as a 40 year loan. They were able to service the low value debt by about $2.00 but we got the loan. Obviously I had many more details than you have supplied, but if they’ve got such a big deposit and $100K income, why won’t the banks deal with them?
Regards
Tony.Hi Greg,
If he’s earning $100K a year he should have great super. This can make a big difference when an older person applies for a loan. If the lender can see he can pay it out at retirement or will have a good income from his super it is much easier. He can contribute a fair bit to super at his age too, so it may be adding up quite quickly.
Cheers
Tracey[biggrin]
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