Over 60s Mortgages
I read a number of articles this week that mentioned 40% of pensioners (and over 60’s) are currently renting and that the number is only going to increase as more and more people rent property. This was not limited to Australia but the U.K. as well and with most 30+ age group either still at home or renting, a rising property market is causing ever increasing numbers of people to rent.
While the Government and mortgage companies offer deals and opportunities for younger people to get on the property ladder there is nothing being done for those who are retired or nearing retirement. If you do not own your own home by the time you turn 60 then unless you break into your Super account by formally retiring (assuming you have a decent retirement pot) and purchase property, then renting is the only option.
Looking at the market for 60+ mortgages if you have retired, then an income stream from a pension fund does not seem to be considered like a salary income would be and very few companies offer mortgages for people in this position. So why are mortgage companies helping younger people and not those who are 60+?
It would seem to me that if mortgage companies are willing to provide mortgages for investors and buy-to-let customers on an interest-only basis, then why aren’t more companies offering this same deal to over 60’s? The over 60’s customer, by paying the interest-only payment, would effectively be paying rent (to themselves) while living in their own home and hopefully see a gain on their property value in years to come. Similar rules could apply in providing a decent deposit (20%-40%) so that the mortgage lender would be covered as far as security and owning an interest in the property and once the property is sold (in the event of death) then the entire interest-only portion could be returned to the mortgage company and the remaining equity in the property would go to the estate. The other benefit to the retiree is that equity from your own home doesn’t impact the age pension asset test.
My wife and I are currently retired and renting on the Gold Coast and rent a 3-bed townhouse (at $580 per week) between the coast and the hinterland. We would like to purchase a 2-bedroom apartment overlooking the coast but are finding that prices are at least $600,000+ which would take up a big chunk of our pension pot. If we were able to obtain an interest-only mortgage, then assuming we put down $300,000 as a deposit and borrow $300,000 on an interest-only mortgage at 4.5% interest rate then the monthly interest-only payment would be $1,135 per month. As it is, our only alternative would be to rent on the coast at a minimum of $700 per week, or $3,033 per month!
Perhaps this is something the industry could consider as I’m sure there is a market there (40% renting and increasing) and would provide retirees with additional funds in order to live in their dream home while using the funds in their pension pot to pay back the interest-only ‘rent’ and live a more comfortable and secure lifestyle on the remainder.
Steve
QLD
I think it would be very hard for someone over 60 to get a mortgage these days to be quite honest. However it would be discriminatory for a lender to rule you out due to age so I believe. If you had a large enough deposit and had a good credit rating maybe you could get what you want. It is hard to say....best to go and check with your bank/credit union as to what your options are.