Navigating the market to secure a mortgage can be daunting, especially when age becomes a factor in the equation.
Considerations that come into play when seeking a mortgage later in life, whether you’re buying your first property, or you’re an experienced homeowner, are about how Banks view borrowing for older people.
Different Banks have different rules about providing mortgages to older people.
There’s no magic number that says you’re too old, but Banks will look at when and how you’ll be able to pay back the mortgage. This is known as an exit strategy.
Banks also have obligations under the Responsible Lending Code, where they need to consider different options when giving you a mortgage, to prevent putting you into financial hardship.
In New Zealand, the standard mortgage term is 30 years. Some Banks are happy to support a mortgage of 30 years for an older person, if you have a clear exit strategy.
So then Banks have a close look at your income, your assets, any debts you owe, and your overall financial health.
If you can show that you’ll have a steady income after you retire, and that you can repay the mortgage within the agreed timeframe, then you’ll have a better chance at obtaining a good mortgage deal.
Working with a Mortgage Adviser becomes more vital at this stage, as a clear exit strategy for your personal situation needs to be put together and presented to the Bank in the best light.
What Impacts Getting a Mortgage?
Your Employment and Income (Money Coming In)
Your job and how much money you’re bringing in are both big factors in whether you’ll be able to get a mortgage, and this is even more true as you get older.
Banks evaluate your current income to ensure you can afford the repayments, so for older borrowers, demonstrating a stable and sufficient income becomes crucial.
If you’re nearing retirement, Banks will assess your retirement income sources, such as pensions or investments, to determine your financial stability.
Some Banks may require a detailed retirement income plan. Therefore, it’s advisable to gather all relevant financial documents and be prepared to discuss your long-term financial plans in detail with your Mortgage Adviser, to improve your chances of approval.
Collateral and Deposit
The amount of collateral or security you can provide, as well as the size of your deposit, play important roles in a mortgage approval, particularly for older applicants.
A substantial deposit reduces the Banks risk, making them more likely to approve your mortgage application.
Typically, a deposit of at least 20% of the property’s value is favourable, but offering more can further strengthen your position.
Additionally, collateral such as other properties, or significant assets, can enhance your application by providing the Bank with extra security and a viable exit plan.
So, for older buyers, presenting a strong financial profile with a significant deposit and solid collateral can make Banks more comfortable, increasing your chances of approval and potentially securing better mortgage terms.
In conclusion, obtaining a mortgage as an older applicant is quite feasible with the right approach and preparation.
By understanding the Banks criteria, effectively communicating your financial situation, and exploring various options, you can navigate this complex process with confidence.
Remember, each Bank has unique policies, so that’s why working with a Mortgage Adviser will enable you to make sense of what’s on offer and find the best fit for your needs.
We cannot underestimate the importance of being well-prepared and informed as you enter the mortgage market.
So, feel free to reach out if you need a hand, or just to have a chat about this, pick up the phone and call 0800 LENDER (536337) or email to [email protected]
