Q. Is there an age where you become too old to take out a home loan? My wife and I are 60 & 62 and are looking to purchase a small house. We are both still working and are not quite sure when we are going to retire, but we’re not sure if we will be eligible for a home loan.
A. There isn’t necessarily an age limit for taking out a home loan, but depending on how old you are, lenders may implement certain provisions.
As a borrower over the age of 50, you will have to provide more information about your future financial position, including an exit strategy. An exit strategy is a plan for what will happen with the loan when you retire. A lender will need to see that you will be able to afford the repayments without having to sell the property. For borrowers who take out an owner occupied home loan, selling the house is not seen as a valid exit strategy. So, when handing in a loan application, not only will you have to show evidence of income, expenses, employment, assets and liabilities, you will also need to show how you can repay your home loan during retirement.
Some examples of an exit strategy include: sale of investment property or other assets, income or payout from superannuation, downsize the property (if possible), investment or other income that will continue in retirement. So, before applying for a home loan, speak with your lender about your options and they should be able to help you find the most suitable loan.