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Effects of ageing on your borrowing

Discussion in 'Property Finance' started by headsonbeds, 25th Nov, 2015.

  1. headsonbeds

    headsonbeds Well-Known Member

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    I'm 40, near to the prime of earnings, borrowing etc, but how do the banks view borrowing at age 50, 60, 70 and beyond. Does you income still reign supreme irrespective of age?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Simple, stop aging ;)
     
  3. headsonbeds

    headsonbeds Well-Known Member

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    Seems to work for you DT that photo makes you look like your 20

    Ahhh to be young again.
     
  4. Redom

    Redom Mortgage Broker Business Member

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    40s prime time in the 'income age life cycle' theory.

    From a lending perspective, no bank is going to mind your age at present. As you edge towards retirement age, lenders will have conservative policies when your trying to lend against your PPOR. You'll start seeing things like P/I loans only, shortened loan terms, etc - all based around a suitable exit strategy to expunge the debt that doesn't severely impinge on lifestyle. In saying that, some lenders are more flexible than others and will take downsizing, etc into consideration.

    For investment lending, its still relatively straight forward as the exit strategy can be to sell up.
     
    Last edited: 25th Nov, 2015
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  5. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Age only seems to be a problem if you are wanting finance for a PPOR and have no IPs. If you have a PPOR and have exit strategies from your IP loans (usually sell) then age does not factor into getting more investment loans.
     
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  6. Perthguy

    Perthguy Well-Known Member

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    My parents in their late 70's just got a loan to build a new PPoR. They don't have a particularly high income or a lot of assets. They do have a couple of IPs though.
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Spot on.

    This is the answer.

    If you're in your mid 50's and wanting to purchase a PPOR with a 10% deposit - then we'll have to do a lot of explaining.

    If you're in your mid 50's and have decent servicing and a strong asset base - then purchasing property isn't an issue. I've sourced finance for a number of clients in their 60's - even a few in their 70's.

    It's all about demonstrating a sound exit strategy.

    To combat ageing - wear sunscreen and moisturise regularly :)

    Cheers

    Jamie
     
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  8. D.T.

    D.T. Adelaide Property Manager Business Member

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    Thank you very much! I wish I could lose 13 years :D
    How do you actually articulate this on a loan application?
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Die young, stay pretty.
     
  10. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Applicant has $x amount in equity held against property xyz - liquidating these properties will result in a net profit of $x which can be used to pay out the subject debt. They also have $x in super - which is anticipated to generate $x per annum in income upon preservation.

    Stuff like that.
     
  11. Jason Tyrrell

    Jason Tyrrell Well-Known Member

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    As Jamie says, let lender know there are enough assets to mitigate risk. Also possible on-going income post retirement age.

    Putting yourself in the position of a lender is the best way to articulate things like this in loan notes.
     
    Last edited: 26th Nov, 2015
  12. Azazel

    Azazel Well-Known Member

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    I know I've put down how much super I have during applications, how do the banks use that in their calculations?
     
  13. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    They don't.

    It just helps to paint a picture of the "character" of the borrower. It helps with credit scoring - but not with servicing.

    Unless you're relying on a pension generated from your super to service a deal.

    Cheers

    Jamie
     
  14. tobe

    tobe Well-Known Member

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    Lenders calculate how much super you will have at retirement. If that is equal or more than what they calculate your loan amount is, it's happy days.

    Btw some lenders are better than others in this space. ANZ are the easiest to deal with imo.
     
  15. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Personally I am hoping to be kicking back, taking it very easy workwise when i'm in my 40's after having built up a comfortable amount of wealth in my 30's... no kids, no mortgage payments... a few IPs.... -->lots of freedom!! :D
     
  16. Azazel

    Azazel Well-Known Member

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    It looked like it was going to be used as an asset against liabilities - or is that just for show?
     
  17. dabbler

    dabbler Well-Known Member

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    Fantastic ! At the rate they have been pushing retirement age, it will never be a problem.....ba ha ha

    On a serious note, at the end of the day, they are worried about if you can pay & if the money is easily recoverable, I know some older people they started forcing to pay for financial advice before getting the paperwork to sign, not sure about now though.
     
  18. headsonbeds

    headsonbeds Well-Known Member

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    Thanks all. I've got a couple of commercial loans that are recalculated every 5 years that's why I'm a little interested in ageism!
     
  19. dabbler

    dabbler Well-Known Member

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    Yeah, will add that from where I stand, the only effect I notice is that when there are changes to lending, all are effected.