Borrowing after the age of 60 is not impossible. Some banks even find advantages to this type of profile. However, the borrower insurance is a major obstacle for seniors who wish to subscribe a mortgage. These will have to justify strong guarantees to convince the bank.
Banks have been reluctant for a long time to apply for loans issued by seniors because of their greater health risks and insufficient income. But in recent years the situation has changed in their favor. Indeed, banks now offer many solutions tailored to seniors.
Main brake: the cost of borrower insurance
Like other borrowers, senior citizens must justify a personal contribution covering at least the notary fees, fees and warranty, usually corresponding to 10% of the requested loan. While many seniors are able to justify this contribution, they must most often do away with borrower insurance, which in principle is not mandatory but is almost always claimed by banks. The cost of mortgage insurance is particularly high for borrowers over the age of 60 who suffer from health problems. In some cases and especially when the health status of the subscriber is too degraded, loan insurance can simply be denied.
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A borrower who has not taken out credit insurance must logically make a larger personal contribution as well as additional guarantees. It can be mortgage loan or the pledge. These alternative solutions may however be particularly expensive for the subscriber.
An average age limit of 85 at the end of mortgage
As life expectancy increases, the age of borrowers increases. A study published in April 2018 by the credit broker YouFinancer states that 17% of borrowers are over 50 years, a figure that has been rising steadily for 5 years. Moreover and contrary to some conventional wisdom, seniors are good customers for banks. YouFinancer emphasizes that these profiles borrow for short periods of time and justify sufficient guarantees to assume their future monthly payments. Indeed, many are already homeowners and their expenses are relatively low since they no longer have dependent children. Over the years, banks have extended the borrowing age limit, which is currently 85 at the end of a mortgage.
Mortgages: financing solutions adapted to seniors
Not all seniors can access the loan. Indeed, those who do not justify a sufficient personal contribution, who suffer from health problems or whose incomes are not high enough, must opt for an alternative solution.
The collateral, a solution to consider
If you do not have borrower insurance, you can turn to the pledge of pledging a financial investment such as life insurance, a securities account, an Equity Savings Plan (PEA), for the benefit of bank. This solution is particularly interesting for older borrowers who will then be able to get rid of potentially expensive death insurance. The collateral also has constraints since the borrower will not be able to dispose of the pledged investment until the credit is fully repaid.
Mortgage life loan, another way to borrow
The mortgage life loan should not be confused with the life annuity sale or the mortgage system. This solution allows the borrower to finance his purchase project. When he dies, the lender is reimbursed by selling the property. The only drawback related to this solution: the transfer of assets to the heirs is significantly impacted.
Guaranteed mortgage loan gives seniors back purchasing power
The bonded mortgage involves the payment of a bond as an additional guarantee. This covers the risk of death and disability of the borrower. This solution exempts the senior borrower from subscribing to borrower insurance and performing medical examinations. The senior who opts for this solution repays his loan by monthly payment. Upon his death, the bank sells the property to recover the outstanding capital. The heirs will perceive the difference between the amount of the sale and the capital remaining to be repaid.
Thus, it is never too late to borrow, especially in the current context of low credit rates.