June 2, 2011
Legally, anyone aged over 18 can apply for a mortgage. In reality, lenders are wary of approving older applicants because, to put it bluntly, they need to know you’re going to be around to service the debt.
If you’re over 45, you will need to demonstrate to your lender your ability to repay a loan over 25 or 30 years. In pre-GFC times, restrictions were not so tight, with lenders handing out 95 percent and even no deposit home loans to anyone who could walk and talk simultaneously.
Now, however, with many who were granted these loans paying off mortgages that exceed their property’s resale value, these types of loans are extraordinarily difficult to come by. They will also usually attract a higher interest rate, which only exacerbates the problem of repaying the debt in the allotted time frame.
Amendments to the National Consumer Credit Protection Act introduced earlier this year have made the landscape even more contentious for older borrowers. The new laws were implemented in a bid to make lenders more accountable in proving customers can meet their financial obligations without enduring financial hardship. The flipside, however, is that the over-45s, pregnant women, the self-employed and those with a high level of personal debt are more likely to have their home loan application declined.
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