One of the ways in which we’ve earned and kept the trust and respect of our clients is knowing when to direct them to other professionals for advice.
A timely case in point is the increasing chatter about banks dropping upper age limits for home loan lending.
Stories like Older Australians into their eighties approved for home loans in The Advertiser mean we get asked our opinions as conveyancers and while we all have private opinions on the matter, we take our role seriously and believe that experts need to restrict their opinions to the field of their expertise.
With that said, I do have some general observations to share, from a conveyancer’s perspective.
More loans to older Australians as banks change age restrictions
The story I cited above is based on the fact that more banks are starting to drop maximum age restrictions for home loan customers.
This does mean that some customers taking out loans in their 80s will most likely still have mortgage repayments until after their 110th birthday.
In the article, Steven Munchenberg from the Australian Bankers’ Association says responsible ‘lending restrictions apply before approving loans to customers to ensure they can meet repayments’ and that is the key to this issue, in my opinion.
Why seek out home loans later in life? Let me count the reasons …
I can understand the reasons an elderly person may want a loan:
- They are asset rich and cash poor but don’t want to sell their current home to release some of the equity as it has sentimental feelings for them along with the fact it is not easy for elderly people to move.
- They may want to travel to see family before they are unable to or they may need funds for a medical procedure and it’s quicker to arrange for borrowed funds than to sell their property and downsize.
- Paying interest is now in some cases cheaper than paying rent so why not owe money rather than rent which can be seen as “dead money”
- They think that paying off the loan can be done later on when they are in a position where they have to sell their house and replay from the proceeds of sale.
As someone who works with facilitating title transfers and contract execution, it all comes down to clarity and confidence.
If the Bank has outlined repayment requirements thoroughly and the borrowers are comfortable with the fact they are entering into debt, then my main concerns are dealt with.
As for whether this is the best course of action or which loan package would suit you best, that is where I would direct you to your investment and or financial adviser; should they advise you to go forward, we’ll be here to make sure the “I”s are dotted and the “T”s are crossed.