Is Age a Factor When Considering a Home Loan?
- September 30, 2017
- 2 min read
- 7440 reads
When you apply for a home loan, lenders will often impose a range of lending criteria that you must meet before you qualify to be funded. Are there any restrictions on the age of an applicant?
Your loan eligibility is often reduced if you are more than 40 years and your remaining years of service is less than 20 years. Since the tenure for a home loan is generally available for 20 years, your retirement age is taken into account.
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What is The Maximum Home Loan Age?
Actually, lenders are not supposed to discriminate a mortgage lender based on their age. However, lenders also must assume the responsibility to ensure that you can comfortably afford to repay the loan without undue financial constraints.
In the past, lenders did not place an age limit on their mortgages. However, a few have introduced age limits on their home loans which range from 65 to 75 years. With this in mind, it might prove to be more difficult to get a home loan, the older you get.
Why are Lenders Reluctant to Lend to Older Borrowers?
Lenders are more attentive in knowing if you can manage timely repayments over the life of your loan. The most important factor in view of this is your income, so if you are retired it will take some work to convince your lender to offer you a mortgage loan.
Considering that the typical term of a home loan is 30 years, it would be hard for a 65-year-old applicant to pay off their loan before their 100th birthday. This, of course, is an unacceptable level of risk to the lender.
How to Get Your Loan Application Approved
Keep these tips in mind to maximize your chances of home loan approval:
- Have an exit strategy: lenders often require older borrowers to have a plan on what will happen next in case they retire. You may outline your plan to sell an investment property as an exit strategy.
- Minimize debt: this is often a crucial factor a lender will look at before offering financing services. Ensure you have paid down your existing debt before you apply as this might well increase your chances of approval.
- Save a bigger deposit: your savings at the bank is proof to lenders of your regular financial discipline. The more you save money, the more willing a lender will be willing to offer credit services.
- Improve your credit history: a good credit rating can greatly improve your chances of obtaining a home loan even if you are advanced in age. Check for any errors in your report and obtain a report from one of the major reporting bureaus.
- Provide more financial evidence: include strong points in your application, such as a successful previously repaid loan. It might also help if you have a sizeable retirement balance, convincing lenders that you are not a reliable borrower.
You might also find helpful advice from a broker who will provide useful tips on how to get the best chances of approval.