How to get a home loan if you’re over 50

• Many banks have lending policies that restrict the borrowing capacity of mature borrowers.
• Apply with a lender that has flexible policies.
• Follow these tips if you’re 50 years or older:
  • Have a defined exit strategy.
  • Repay the loan prior to retirement.
  • Apply with a lender that understands and accepts mature age borrowers.
  • Demonstrate an ability to repay the loan before you’re 75 years old.

Stamp duty exemption

• The property must be a new property, off the plan purchase, or a substantially renovated property.
• The contract price must be no more than $600,000.
• All purchasers must be 55 years old or older.
• The purchasers must move into the home in the first 12 months and remain in the property for at least 12 months.
• The purchasers must have owned and occupied a home in the 12 months prior to buying this property.
• The purchasers must sell their previous property either prior to or within six months after the settlement of their new property.

Retirement age v. lending policy

• Different banks have different policies for borrowers nearing retirement age:
  • 35 years old: Lenders consider your profession and likely retirement age and may shorten your loan term.
  • 45 years old: You may need to show superannuation statements or demonstrate an exit strategy.
  • 50 years old: Most lenders will allow you to borrow, but some may decline your application due to age.
  • 55 years old: Almost all lenders require a written exit strategy and evidence of superannuation and other assets.
  • 60 years old: Most banks are likely to decline your application due to age unless you have a continuing source of income or assets to repay the loan.
  • Over 75 years old: You will require an exit strategy.
  • 65 / 75 / 80 years old: You can borrow money with a seniors equity loan (reverse mortgage) or a standard loan if you can prove ongoing post-retirement income.

Good v. bad exit strategy

• Acceptable strategies:
  • Reducing the loan term.
  • Downsizing your property.
  • Using your super fund.
  • Selling an investment asset.
  • Passive post-retirement income.
• Unacceptable strategies:
  • Inheritance.
  • Projected income or superannuation balances.
  • Anticipated Workers’ Compensation payout.
  • Anticipated Family Law settlement.
  • Anticipated employer’s bonus payment or wage increase.
  • Sale of a business.

Downsizing – Pros & Cons

• Pros:
  • Free up equity in your current home.
  • Stop cleaning and maintaining a larger home.
  • Live closer to friends and family.
  • Lower maintenance and upkeep costs.
  • Cheaper cost of living.
  • Simplified living.
  • Move to your ideal location.
  • Repay debts or have smaller home loans.
  • Increased financial cushion.
  • Reduced carbon footprints.
• Cons:
  • Huge cost of selling the house.
  • Difficulty finding a new property.
  • Adapting to changes.
  • Clearing out sentimental possessions.
  • Space constraints.

Downsizing – super contributions

• Conditions for adding downsizer contributions to your super:
  • The house must be owned by you or your spouse for at least 10 years before the sale.
  • The house must be your primary place of residence and fully or partially exempt from capital gains tax.
  • The house must be in Australia.
  • The house must not be a caravan, houseboat, or other mobile home.
  • You must not have made a downsizer contribution to super before.
  • You must fill in the downsizer contribution form and give it to your super fund before making the contribution.
  • The contribution must be made within 90 days of receiving the sale proceeds.
• Pros of downsizing contributions:
  • Adding money into a tax-effective superannuation fund.
  • No requirements to purchase a new home.
  • Increased retirement savings and a more secure future.
  • No upper age limit and no work test for a downsizer contribution.
  • Exempt from contribution caps.
• Cons of downsizing contributions:
  • May impact aged pension eligibility.
  • Not tax-deductible.
  • Only one downsizer contribution allowed in a lifetime.

Do I need an exit strategy for investment properties?

• You don’t need an exit strategy for an investment property as you can sell it anytime without financial hardship.
• Some lenders may require an exit strategy for investment property mortgages.

I’m a business owner, am I qualified for an over 55 loan?

• Business owners may still earn an income past the normal retirement age.
• Qualification depends on:
  • Whether you’re required to do manual labor.
  • Having a succession plan for management.
  • The business’s ability to operate without you.

Required documents

• Depending on the exit strategies used, you’ll need:
  • Superfund statement.
  • Superannuation calculator.
  • Amortization calculator.
  • Letter from a financial planner.
  • Evidence of investment properties held.
  • Share portfolio statement.

Property purchasing costs

• Minimum of 5% deposit.
• Stamp duty.
• Property title transfer fee.
• Registration fees.
• Conveyancing fees.
• Inspections including building/strata and pest.
• Home loan setup fees.
• Lenders Mortgage Insurance (LMI).

Property selling costs

• Agent Fees
• Marketing Costs
• Conveyancing Fees
• Capital Gains Tax (CGT)
• Presale Repairs and Renovations
• Styling/ Home Staging
• Auctioneer’s Fees
• Lender Fees
• Moving Costs