When 50 isn't the new 30

Applying for a loan in mid-life can be fraught with challenges. Prepare yourself for the inevitable by learning how banks assess mature applicants and what you can do to improve your chances. Here, two experts share their hard-won knowledge on how to approach home loans in middle age.

ANSWERS BY KELLIE COWIE,
By Design Financial. 

1 What’s the difference between applying for a mortgage in your 30s compared with your 50s?

As a person matures, lenders shift their focus and begin to have a heightened awareness that the applicant is approaching retirement age which, from the lender’s perspective, impacts a customer’s ability to earn an income and therefore repay a home loan.

Unfortunately, this means that not all lenders have an appetite for mature-age clients. This makes finding the right lender imperative. Finding the right fit and pre-empting possible pain points can ensure an application for a 50-plus person’s home can pass smoothly through a lender’s assessment.

That said, there are many lenders that love a mature-age applicant, as long as they can demonstrate how they plan to repay the loan before retirement – that is, they need an exit strategy to show they will have this loan repaid, in full, before their income stops.

Having a continuing source of income (post-retirement) or assets that can be sold without causing financial hardship is the key to a successful application for this age group.

Factors that impact an application include whether the person plans to buy a property to live in or as an investment and what other assets they have to help support them with an income beyond retirement or to allow the loan to be paid out when income ceases.

2 So, how is the loan-approval process different if you’re in your 50s?