Are you able to apply for a home loan on the Age Pension?

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Ron has returned to Australia and wants to buy a house, but is worried about the process.


Q. Ron
I have mainly lived overseas for the past eight years but have now returned to Australia to live with my Filipino partner of six years.

I am on the Age Pension. My partner is completing an Aged Care course and will work part-time as I need assistance due to a chronic back condition.

After reading a few of your articles lately, I am wondering whether we would be able to obtain a small loan to assist us in buying a property. We will have a substantial deposit (60 per cent) and will only need $50–70k depending on purchase price.

From what I have read and understand, it would cost us less to do that than rent and I will then have made some provision for my partner when I finally ‘check out’.

My partner will be a permanent resident within the next 12 months, and her application is underway.

A. Even with a healthy credit rating and large deposit, lenders now apply a much more stringent lending criteria to mortgage applications, so a home-loan approval is not guaranteed. 

It’s no longer enough to have the equity in your home as a guarantee to your lender that it will get its money back. You may have to provide an exit strategy to convince your lender that you will be able to repay the debt before your partner retires. Or, you could settle for a mortgage of a shorter duration than the standard 30 years, which will, of course, mean higher monthly repayments. 

While the Age Discrimination Act and the National Consumer Credit Protection Act mean that a person cannot be denied a mortgage based purely on their age, lenders do have a responsibility to ensure that a loan can be repaid and that borrowers are not put under financial stress by having to pay a mortgage. 

So, if you’re considering applying for a mortgage, what can you do to ensure the process is as easy as possible? 

  • Consider how much you can comfortably afford to repay and factor in a higher interest rate of around eight per cent to your calculations. This is what lenders will do and, consequently, people are finding that they can borrow less than they originally thought. 
  • Make sure your credit history is squeaky clean and don’t apply for credit unless you really need it. The introduction of comprehensive credit reporting will help those with a good credit history but it will also quite harshly punish those who have been a little wayward. 
  • Have a sizeable deposit. (It seems you already have this item checked off.)
  • Your savings could be your saviour. As with first homebuyers, if you can prove you have a good record of saving, the more likely you will be successful with your application.
  • Get your paperwork in order. Gather together details of all your investments, superannuation, savings, bank accounts and, of course, money that you owe, as the more you can demonstrate you’re in control of your finances, the better your chances of securing a loan.

If you have a Centrelink question, please send it to [email protected] and we’ll do our best to answer it for you.

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

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Written by Ben


Total Comments: 13
  1. 0

    Take it that the partner is younger and working age. Once residency is established why not get the partner to get a housing loan. Work was mentioned; depending how much she’s earning it might affect the age pension. Good luck, worth a try. They can only say no.

  2. 0

    We have just been denied a loan for the first time in our lives thanks to the new APRA rules. The bank now ‘deems’ an interest rate of 7.25% even though they are lending to you at 3.99% Why? It’s a new rule. You have to be able to show that you can still service your loan at 7.25% even though we haven’t seen an interest rate at that level for 13 years.

    We have $2.4 million in super. We can’t factor that in because the bank can’t touch it if we default. Yes but we would sooner delve into our super than default. Sorry, can’t accept that.

    Okay, we have $300,000 in shares and managed funds which would service the loan for 10 years. We choose not to sell now because it would trigger CGT liability so we want to sell these in two years time once fully retired. We can’t factor that in either says the bank. You might spend it. Yes I said, but someone on a $80,000 pa wage might loose their job. Ah, well we will have the mortgage insurance we now make people take out to cover that.

    You will also have to reduce the credit limits on your credit cards we were told. Why we asked? We pay off the full balance each month. Yes but you might change a lifetime of practice of doing this, go crazy and spend up to the limits.

    Welcome to the new world of finance post the Royal Commission.

    All we wanted to do is obtain a loan to buy the house of our dreams at a seaside location now, rent it for two years until we retire fully and then pay off the mortgage when we sell our current mortgage free home in a Brisbane inner suburb.

    We have never failed to meet a commitment in our lives, both have unblemished credit histories and have capacity to meet the loan we sought for years yet we cannot get the loan because of ridiculous interest rate deeming and an inability to look at our circumstances because of all the things we ‘might’ do but in reality never would.

    It’s ludicrous.

  3. 0

    Illuminati: You have more than enough to satisfy any ‘ normal ‘ banks requirements for a loan
    This is the banks way of exacting a politicised revenge for being caught out as cheats, thieves and criminal liars. Now the more public discontent against the results of ASICS decisions they can arouse by denying proven responsible applicants with more than suitable assets, the better chance they have of being able to repeat their thievery in the future by forcing future governments to look the other way when they begin repeating themselves with the same disgusting behaviour, just as the current coalition govt did so many times in the recent past.
    I would say its high time the banks current lending practices were properly investigated

  4. 0

    Lending institutions are only concerned about 2 things, does the applicant(s) have the ability to repay the loan and is there sufficient security offered to realise on should the borrower default. In the case of a fixed income such as an age pension a rise in interest rates is certain so a notional rate is the one used to assess the repayment factor.

    Some lending institutions have a policy that they will not lend to pensioners regardless of the repayment ability and good security because in the event of a default the media latches on to the “heartless” lender throwing a poor pensioner out of the family home. Makes good press but the lending institution is not at fault, the borrower is.

  5. 0

    I remember when I went for my first mortgage 1985 they said your income must be an earned income so you had to be working

    • 0

      different times … not only earned income but your repayments less than 30% of take home and you had to have mortgage insurance if less than 20% deposit

  6. 0

    I remember when I went for my first mortgage 1985 they said your income must be an earned income so you had to be working

  7. 0

    Tighter lending rules forced on the banks following the Royal Commission, coupled with the possibility of the Greens/Labor/Unions new and increased taxes, disliking for real estate growth, should be starting to sound a bell, but is anyone listening?
    The banks now need to treat every loan application with the possibility that the borrower will be taking legal action in future years, seeking compensation because the bank should not have allowed the application to proceed.
    Labor has done such a good job on banks that many have forgotten that banks can be your best friend. Talk about shooting ourselves in the foot??!!



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