When you apply for a housing loan, banks and non-bank lenders impose on you a number of loan criteria that must be met before you can qualify for this financing. These include stable income, proof of income source, good credit history and minimal debt.
But what about age?
Are there any restrictions on the age at which you can take out a home loan? What impact does age have on borrowing power? Let’s take a closer look at this topic.
What is the maximum age possible to get a loan?
There is no widely accepted maximum age limit at which you can qualify for a home loan. There is, however, the Act on Discrimination Based on Age and the Act on Consumer Protection, which prevents lenders from discriminating against mortgage applicants based on their age.
However, lenders are also required to ensure that anyone who takes out a loan can conveniently afford to pay it back without experiencing undue financial hardship. With that in mind, the older you are, the harder it can be to get a mortgage.
In the past, lenders did not impose any age limits on the mortgage. But over the past few years, a small number of lenders have introduced certain age limits on some of their home loans. Where maximum age limits apply, it is usually between 65 and 75 years old.
Why are lenders reluctant to lend to senior borrowers?
Lenders are not entitled to discrimination based on age, but they still need to make sure that the standard lending criteria are met. This is based on your ability to repay the loan in a timely manner during the loan term. The most important factor affecting the repayment of a home loan is the income you earn, so if you already have a retirement or are about to leave your job in the next few years, it will take you a little more effort to convince the lender that you will be able to pay back the loan.
The lender must be sure that you can repay the loan. When you consider that a typical home loan term is 30 years, the 65-year-old applicant could potentially be within 100 birthdays before paying back the loan – and this may constitute an unacceptable level of risk for the lender.
If you are an older person and apply for a housing loan, the lender will evaluate your application in the same way as an 18-year-old or 38-year-old application. If your finances are okay and you can show your loan repayment capacity, your application can be approved. It is slightly less restrictive when it comes to short-term attractive non-bank loans – because here, in fact, age does not matter. It is important to be an adult to qualify for such a loan.
Familiarize yourself with all the tips and advice to increase your chances of accepting any loan application.