Loan at age 63

Discussion in 'Loans & Mortgage Brokers' started by KateSydney, 9th Jan, 2019.

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  1. KateSydney

    KateSydney Well-Known Member

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    My friend has only her super (not enough) but no home. She turned 63 today. She has some part time work editing and some pt academic work. She believes that as soon as she gets a full time job she'll be able to get a small home loan to buy a unit in Perth. I don't think she will be able to. (Get a loan or a ft job). But I can't tell her that! I think she may have to draw down her super to buy a $200k flat. At least then she would have somewhere to live in retirement. But her super is in the old Commonwealth Public Service scheme which is a really good one and she's worried that it would be bad to give any of it up. She has an unusual approach to other human beings and cannot be persuaded to consult a financial advisor. Any thoughts, opinions?
     
  2. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    A loan would be difficult as the term would need to be short
    Prob 7 or 12 years max due to age.
     
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  3. Shogun

    Shogun Well-Known Member

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    Owning a flat has outgoings rates, water rates, strata etc. Maybe $70 week plus
    Flat will have little capital gain prospects (from what I read on here).
    It does give security of a place to live.
    Is it better to have income off $200k of super (5% +) and rent or own a $200k flat (maybe a few % growth per year capital gain long term) with costs of owning.
    Most of those flats are old and I would expect ongoing maintenance costs
    Currently a $200k flat rents for about $200 a week near me.
     
    Last edited: 9th Jan, 2019
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  4. Noobieboy

    Noobieboy Well-Known Member

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    If CPSS is a defined benefits scheme than I don’t understand why she would want to withdraw that. I would beat my self senseless if I did!
     
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  5. Joynz

    Joynz Well-Known Member

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    Renting might be a better option for her - particularly if she has a good amount in super or is on high defined benefits as she may have enough income to have a choice of good housing.

    It depends on what she is trying to achieve. Also, many people are working to 75 and older from choice (because they enjoy it).

    If her defined benefits amount is high, perhaps that might also help with getting a loan - I believe some benefits might be as high as 75% of your final year salary pre retirement...for the rest of your life!
     
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  6. jrc

    jrc Well-Known Member

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    I think your friend is right to want to keep her defined benefit superannuation intact for as long as possible.
     
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  7. astonma

    astonma Well-Known Member

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    First step would be to work out the cost of rent vs buy if this hasn't been done, it could be cheaper renting and less stress
     
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  8. SatayKing

    SatayKing Well-Known Member

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    Obviously I don't know the exact nature of your friend's superannuation scheme. However, if it is the equivalent of the old CSS one then on her retirement she would receive a CPI indexed defined benefit pension and a return of her super contributions plus earnings. She can take that as a lump sum or convert it to a non-indexed pension. If she takes it the lump sum, depending on how much it is (after any tax) it may - or it may not - be sufficient to purchase a smallish unit.

    Then again if she will not seek proper financial advice - you certainly cannot/shouldn't take on that responsibility - nothing can be done and she'll just have to muddle along under her own steam.
     
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  9. Brady

    Brady Well-Known Member

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    A lot of banks have unwritten policy of loan being repaid by age 75 so yeah 12 years would be the normal but...

    @KateSydney what age can your friend start receiving a payment from the super scheme.

    This payment can be used as income to service the loan. Given the nature of the super it's a pretty safe income :) which can see loan term extended past the normal.

    Friend would still need to have deposit, probably wanting max 80% loan
     
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  10. KateSydney

    KateSydney Well-Known Member

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    Oh brilliant - I didn't realise that - thank you.
     
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  11. Brady

    Brady Well-Known Member

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    Index life pension... they're going to keep getting that income until they pass away, sounds like pretty secure income to me.

    And if the deposit is large enough minimises the banks risk if/when they pass away.

    So as long as that income can service the loan based on the banks assessment, looks pretty doable.
     
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