Age Limits for Mortgages? Can You Still Borrow After 50?

If you are seeking a mortgage later in life, it might feel daunting seeing terms of 25 and 30 years, so in this blog post we explain everything you need to be aware of if you are looking to apply for a mortgage after 50.

While there is no magic number when it comes to age and getting a loan, different banks have different rules and policies about giving loans to older people. The big thing they look at? Your ability to pay the loan back within the timeframe.

While this is to safeguard themselves, it is also part of their duty under the Responsible Lending Code which ensures that lenders try to prevent putting you, as a borrower, into financial hardship.

If a bank is happy to lend on a 20-30 year term to someone over the age of 50, they will often look at your current and projected financial health - that’s your income (and projected income if retirement is on the cards), your assets and debts and your overall financial health.

If you can show that you will have steady income throughout the loan term and that you can repay the mortgage within the agreed timeframe, then you’ll likely be able to receive a good deal on your loan.

So let’s take a closer look at the two biggest factors that a bank considers when approving a mortgage application.

Your income

While this one is pretty obvious, lenders want to see that you will have steady income coming in throughout the term of your loan. This includes any employment you may have now as well as money coming in when you retire. This could be income from pensions, superannuation, KiwiSaver, or other investments.

You may be required to prove your financial stability with a retirement income plan, detailing the sources and amounts of your income. It’s a good idea to provide your lender with as much information as possible and be sure that you have a solid long-term plan in place - this is something our team of Christchurch based mortgage advisors can help you with.

Collateral and deposit

The second thing to consider is the amount of security and deposit that you can provide. The larger your deposit, the smaller the loan and less risk to the lending provider (and the easier it is for you to pay the loan back!) A larger deposit makes you more attractive to a lender and also helps to ensure that you get better lending options.

Collateral such as other properties or high value assets can also help in your application as they provide the lender with added security and an optional exit plan, should you be unable to repay your loan.

Buying a home as an older buyer is absolutely doable with the right strategy and advice. There is a lot more to consider and much more risk for both lender and borrower, so it’s important to be aware of all of the ins and outs and create a strategy and exit plan that work for you. Since each lender has such different policies and rules around lending to older borrowers, it’s a good idea to get a mortgage advisor on your team to help you understand these policies and structure your loan in a way that fits with your individual circumstances and financial goals.

If you’d like to know more about borrowing for a home or investment property as an older buyer, don’t hesitate to get in touch with Loan Market Agile and we can help you run the numbers and make a choice that feels right for you.