Home loans for pensioners

If you’re retired, you may expect it will be harder for you to enjoy the financial flexibility you had during your working life. This is true to an extent, but there are a lot of home loans for pensioners out there, and some of them offer very good deals. Whether you want to buy a new home or draw on the equity in your existing home so that you can have some money with which to enjoy life, you should be able to locate a suitable product.

Getting a home loan as a pensioner

The biggest challenge to getting a home loan as a pensioner is that your income will probably be lower than average. Because lenders see this as a risk – something that’s likely to make it more difficult for you to keep up with your payments – they are likely to charge a higher rate of interest, and some will be unwilling to lend you money at all. There are, however, specific loan products out there designed for pensioners. These often draw on the fact that you are likely to have a lot of equity in your home, and use that to balance the risk.

Home loans for disability pensioners

If getting a home loan is difficult after you’re retired, you might expect it to be even more difficult if you have retired on disability. In reality that’s not the case. Many lenders see disability payments as a reliable source of income and will actually be prepared to lend you more money in this situation. You may need to provide additional paperwork, including documents from Centrelink confirming the benefits you receive, and more bank statements than the average borrower. Cases involving disability are usually assessed manually instead of being submitted for approval by a computer system, so you can get a solution tailored to your circumstances.

Reverse mortgages

A reverse mortgage is a special arrangement available to pensioners who own their homes. It enables you to draw on the equity in your home so that you have money to spend when you need it. You can continue to live in your home but when you choose to sell it or move into residential care, or when you die, the lender will recover the money. There are various arrangements available – for instance, you could get a lump sum to spend on your dream holiday, or you could get a steady income to improve your day-to-day standard of living.

Line of credit loans

A line of credit loan also draws on the equity you have in your home but rather than giving you a predetermined amount, it simply places a limit on how much you can borrow. This means that if you discover you don’t need all of it, you won’t be paying interest on money you haven’t used. Beware though, it is like having a large credit card, so before you take a line of credit it's important to ensure you have the capacity to repay it as a pensioner.