Age 60 isn’t considered ‘old’ anymore, with many people continuing to work well into their 70’s but there are some extra considerations to look at, if you are wanting to secure a mortgage at age 60 or over.
Age alone will not prevent you from securing a mortgage for your new home, but you’ll need to show you can still meet the finance requirements, especially if you are retired. Let’s look more at how the over 60 age group should approach getting a mortgage, and how it works in popular retirement destinations abroad.
Is there an age limit on mortgages?
It is illegal for a mortgage lender to decline your application based on your age. You can qualify for a loan at any age if you meet the financial requirements. Proof of steady income can be limiting if you are retired (or about to be). The most important thing to the lender is not your retirement status, but rather, your ability to repay the loan.
What do I need to get a mortgage if I’m over 60?
You’ll need to be able to prove your ability to repay the loan.
- Proof of income: prove that you receive a steady income and can make loan payments consistently which can include a combination of pension and retirement payments.
- Debts: Itemize your outstanding debts, like credit cards, loans and current mortgages.
- Debt to income ratio: A comparison of all your debts to all your income. Mortgage providers use this calculation to determine if you are qualified for a mortgage.
- Credit score: Lenders are looking to see that you have a good credit score.
- Your lender will expect to see this information whether you’re retired or not.
Banks and lending institutions place strict lending criteria on financing mortgages and all applicants must satisfy those requirements, but when you are over 60 years, a longer-term mortgage will have some restrictions. Lenders have set the maximum age limit for a traditional mortgage to range from age 70 to a maximum of age 80. You can see how borrowers, aged 70, would be unable to secure a 25-year mortgage as they would be 95 years old when they were done paying off the loan.
Age restrictions are having an impact on younger applicants, too. For example, many people in their fifties are discovering that due to the lending age limits, their home mortgage term is for a shorter period, (less than 20 years) which means higher monthly payments.
Retire in France
France is renowned as a property and lifestyle destination for retirees from overseas and the United Kingdom. People in their late fifties to early sixties who are looking to buy in France, are often still employed and earning a steady income. French lenders will notice their age and wonder when they will be retiring and what the impact of retirement would have on their income. Therefore, the financial buffer of liquid savings or investments is very important to French lenders.
In France, if you are over 60, you will be required to have what is called a Senior Policy; which is mortgage protection life insurance which increases in proportion to the borrower’s age. The maximum age at the end of the mortgage term can’t exceed 75 or 80 years old, because the life insurance premium becomes much higher under the senior policy, which impacts the Annual Percentage Rate (APR) significantly.
French home loans are heavily regulated and subject to a legal cap, called “Taux légal de l’usure”. This means that fixed mortgages with a 10 - 20 year amortization period, cannot exceed a set maximum APR, which greatly limits financing options for senior client. (French Entrée)
Secure a mortgage in Spain
If you are considering retiring in Spain and are over age 60, you can get a mortgage if you are receiving a pension. You can appoint a guarantor (often a family member) when applying for a Spanish retiree mortgage, which may also give you some tax advantages if you list the guarantor as part-owner of the property.
More and more foreigners are buying homes in Spain. Centro de Información Estadìstica del Notariado (CIEN) reports that for the second half of 2021, real estate sales to foreign buyers in Spain increased by 41.9%. According to the data provided by the Property Registry in Spain, 7% of the property mortgages issued in Spain were signed by foreign citizens.
If you have made the decision to buy a house in Spain at age 60 or over, consider that if you already own a private home, you can sell it, which will increase your savings for the purchase of the new Spanish property. Remember that those over 65 years will pay the income tax on the capital gains arising from the sale. You could also rent your existing property and use the rental income toward your total income.
Mortgages in Portugal
Buying property in Portugal is a good investment, as you can benefit from low mortgage rates, or you may be eligible for Portugal’s Golden Visa Program. Find out more about buying overseas in our guide on buying property in Portugal.
Financing a Golden Visa Property - If the property costs €500,000 you must pay the €500k in cash. However, if the property costs over this amount, say €600k, you can get a mortgage for the remaining €100k.
The maximum mortgage term is typically 40 years in Portugal for applicable residents; people who have been paying Portuguese income tax for longer than 2 years. But if you’re 60, for example, you won’t be able to take out a 40-year mortgage as banks only lend until the age of 75. As a retiree, you can acquire a mortgage in Portugal provided you have a stable pension income. Most banks will not offer a mortgage to individuals who are over 70 years old.
Older mortgage applicants will be asked about including life insurance if they plan on getting a mortgage in Portugal. Some banks will always require life insurance, while others can't include it for their non-resident clients. This is not age depending. Most Portuguese banks offer insurance products, or you can speak to an insurance broker who will be able to provide some options for you.
Pensioners and mortgages in Switzerland
If you are looking to finance a Swiss home when you are close to retirement age, or already retired, you will find that Swiss Banks are increasing their mortage affordability criteria. Swiss banks have several safety controls in their mortgage granting process which include new homeowner equity requirements, new amortization rules, and strict adherence to lowest valuation principles.
Swiss banks have also become more rigid in their ongoing mortgage affordability inspections. The ‘golden rule of home finance’, is that mortgage rates plus additional charges should not amount to more than one-third of the borrower's income. The income of a Swiss pensioner is, on average, a third lower than pre-retirement household income. For this reason, a fair number of pensioners can’t meet the affordability requirements.
However, there are a few banks that do offer alternatives. These include sharing ownership with other family members or pledging part of your savings to a mortgage by transferring the money or securities to your lending bank.
A reverse mortgage, or ‘senior mortgage’ is a financial product that is offered almost exclusively to the elderly. Typically, reverse mortgages have fixed rates and a mortgage term of 10 years or more. It is important to note that if you want to leave your home to beneficiaries, or hope to sell your home in the future, a reverse mortgage is not a good idea.
Why a retiree may want a mortgage
There are several reasons why you might want to take out a new mortgage at age 60 or over:
- A better fit – you may want to buy a home that will suit your needs as you get older, like main floor bedrooms and fewer stairs.
- Adapt to change – you may prefer to downsize, change the scenery or otherwise make changes to your lifestyle that will fit with your retirement plans.
- Additional income – you can release equity from your current home or supplement your retirement income by renting it.
There are risks involved in mortgages for seniors, as taking on new debt can be a risky endeavor if you’re retired or planning to retire soon. However, the bottom line is that getting a mortgage when you’re over 60 is almost the same as getting a mortgage when you’re younger if you can show lenders that you have a reliable source of income.
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