More and more people are choosing to purchase a new home at a later age.
That does not seem to be such a problem at first sight, until you visit the bank. From the age of 60 it is perfectly possible that obtaining a home loan.is made considerably more difficult. Does this mean that in practice you can better put your dream to get hold of a dream home in the freezer? We will gladly go into it and tell you all about it in this interesting blog article.
The life expectancy of the borrower
One of the perhaps most important factors that a bank takes into account when issuing a credit is the life expectancy of the borrower (s). However, there are no general rules for this. This is expressed in practice under very different conditions. For example, Argenta is a bank that prefers to see a home loan repaid by the age of 70. At BNP Paribas Fortis this limit is a bit lower. The youngest borrower may be up to 67 years old. The reasoning behind this, however, may not be the one you think. For a bank, however, it is important that the borrower is a wage-earner. From the age of 67, the borrower is by definition no longer because he or she has reached the status of pensioner.
By the way, not every bank chooses to use an age limit for providing their loans. In particular, KBC & Belfius major banks, for example, have already indicated that they are not so much adopting a fixed maximum age for whether or not to grant their loans. Naturally, they determine the potential approval of their credit files on the basis of criteria drawn up by them. Indirectly, the age of the borrower can therefore play an absolutely significant role in this.
What about the debt balance insurance?
The above makes it clear that it is absolutely not correct that a person in later life can automatically no longer take out a home loan. But it is true that there are some times to the medal. An important and often decisive factor in whether or not a (residential) credit is granted are the guarantees that are in return. Especially with borrowers who are a bit older, they look at these guarantees with a magnifying glass. Are they insufficient and is the risk for the lender too large? Then it is still possible that you run into a refusal of your credit application. It must be said, however, that this applies not only to the older, but certainly also to the young (er) borrowers.
An extra point to keep standing still when taking out a home loan later in life can be found in the form of the cost of the debt balance insurance. The premium that is charged for this is largely geared to the life characteristics of the borrower. This not only concerns his general health or lifestyle, but also, for example, the risk of death during the payment period. For seniors, this risk is obviously higher compared to 25-year-olds, which will always have an impact on the costs to be paid.
Is there perhaps also a minimum age?
A formal maximum age is therefore not used by banks nowadays, does this also apply to the minimum age at which you can take out a loan? Unfortunately not. The law says that every person who wishes to take out a loan must be legally competent. These are, of course, difficult words to indicate that a borrower must always have reached the age of 18 years. In principle, it would be possible to circumvent this law, but this requires a substantial procedure which actually has little chance of success in practice. Moreover, it goes without saying that in this situation, the bank will also be looking explicitly at the repayment possibilities of the loan in question.
What about the income of an older borrower?
Throughout this article we have indicated several times that the chance of success of a credit application at a later age is not seldom dependent on the income that is available. It goes without saying that the bank always wants to have the best possible security with regard to the repayment possibilities of the financing provided. Is income no longer available, for example because you have already taken early retirement or because, for example, you became unemployed due to circumstances? In that case, other guarantees will have to be provided in order to be able to prove the repayment capacity of the loan in question. In any case, the assumption that it is no longer possible for elderly people to take out a loan is in practice absolutely not correct. However, it is necessary to prepare well and of course take into account the conditions of the bank in question.