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© The Mortgage Gallery Rockingham

How Old Is Too Old When Taking Out A

Loan?

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© The Mortgage Gallery Rockingham

What the bank perceives as too old to take out a loan or a mortgage and what you

believe that age should be are two different points of view because the decisions are

based on contradictory criteria. Unfortunately, it is the banks that get to make the final

decision and getting past their base criteria can be troublesome or sometimes,

impossible. Turning to a mortgage broker in Cockburn or Kwinana for help can ease

your situation.

Age Related Rules

The majority of banks have some simple basic rules. The maximum term for your

mortgage is 30 years. The maximum age you can carry a mortgage is 70 years of age.

The easiest mathematical quest will tell you that you can’t have a 30 year mortgage

after the age of 40. The cheapest monthly payments arrive with a 30 year mortgage

term. For every year the term is reduced, your monthly mortgage payments go up –

because the loan has to clear in a shorter time frame.

The second rule the banks work from is how much income you have and when will you

be able to make your monthly loan or mortgage payments. They don’t want your loan to

continue after you retire because they perceive that your income will reduce either

partially or significantly. To be fair to the banks, they shouldn’t lend you money for a

time in your life when you won’t be able to make repayments. If you consider the bad

publicity they would receive coupled with the possible loss of your home because you

can’t make payments, you can see their point of view.

Responsible Lending – Seek Home Loans Help in Kwinana and Cockburn

Banks have to lend money responsibly. In the past few years during the recession, they

have learnt many lessons about lending money, lending too much and lending to people

who might not be able to repay the debt. This was one of the most glaring pieces of

education for banks who sometimes lent money to people who didn’t need to prove they

could pay, which became the largest area of defaulting loans and mortgages.

You can talk to banks about retiring later and age discrimination, but perhaps arranging

for your loan or your mortgage broker to present your case for you will help your

situation, if you are convinced you can maintain a loan beyond the standard periods.

themortgagegalleryrockingham.com.au

© The Mortgage Gallery Rockingham

Increasing the Pension Age

Between 2017 and 2023 the qualifying age for Age Pension will move up to 67. This

might help banks become more flexible with the termination date of a loan or mortgage.

If you need to stretch the years beyond the bank’s current rules, you could consider

Equity Release. If you are over 63, banks will lend you money based on the equity in

your home. You won’t need to make monthly repayments, but interest will be charged

and the debt will increase against your property’s value.

If you are worried about how old is too old when taking out a loan, ask your mortgage

brokers in Kwinana or Cockburn to help you structure the right deal for you.