Over 55s investing- will the banks lend?

Hey everyone,

I'm curious to know if the banks lending criteria changes for people in the 55-60 range? If so, what limitations does this pose on investors at this age, especially with an existing portfolio that is neutrally geared.

E.g Does the bank restrict the use of interest only loans, LVR restrictions etc

I understand this is a highly subjective question based on the individuals circumstances but i'm just curious to know if there are typical and standard procedures the banks implement to minimise their risk.

Cheers

 

Some lenders actively discriminate - wanting shorter loan terms or 'exit plans'. Others are ok.

 

I have a client who is 85.
He has always been an active investor, he was taking me through one of his huge commercial sites in eastern suburbs the other day and he said "you know Xenia, I bought this for $9000 and struggled to pay it off lol - worth around
$2 - $3 million now.

Anyway, he is now building new townhouses in North Adelaide - he keeps all as rentals, obviously has heaps of equity. He still borrows money and is very Active.

I don't know much about how finance works but if you meet the affordability criteria, why would age come into it?

 

age is probably an issue because under the NCCP Act a lender has to make sure a borrower is able to pay the loan and that it is not 'unsuitable'. Extra care is needed with elderly because of the potential perception that they won't be able to afford things when not working. It would also be potentially ACA type bad publicity which lenders want to avoid - Bank lends to 90 year old for a property he could never afford - sort of thing.

 

All lenders will require an existing strategy if the repayments go beyond 70 years of age of the client.

The only exception is Westpac and investment loans whereby they have a no age policy. So you can be 70 years old and they will be able to give you a loan for an investment property (provided of course you can service the debt).

 

Just this month I've arranged loans for two 60+ applicants - both have recurring income and a plausible exit strategy. There was no issues in getting their loans approved.

 

Thanks everyone, your help is greatly appreciated

 

I was talking to a customer the other day (spanish, came out in the 60's on the same plane as the Beatles, didn't know who they were, when getting of the plane he thought all the girls were welcoming him to Australia), he just sold 1800sq in prestige Mosman Park WA to developers, Glyde St, footy kick to the train, zoned highrise, 3.5mil, paid ~5k for it.

 

I just LOVE these stories, I have so much respect for these go getters who had such a huge vision back then. There were no support groups or people to chat to online in those days, they relied on their own vision. Love it.

also, just to clarify, I think all of my client's purchases and loans are in a trust so not sure if this makes a difference to the discussion of the lending.

 

Depends on the lender, and the type of deal your presenting. All will want exit strategy as some have said. An exit strategy for an investment property is pretty simple - you can sell it.

If you're servicing is weak at best and your trying to do a $500k equity release on your PPOR though, that could be a lot more difficult. You may still be able to find a solution though.

Many will restrict loan terms (NAB for example will likely want a 10 year loan term), others won't like it (Macq likely won't), some will accept 'downsizing' as an exit strategy, some won't.

 

We've had no problems

Cliff

 

If it's to purchase an IP and you have your own PPOR ( ie not living " rent free" at home ) than most lenders wont have any issue with age- they will ask question but nothing that requirs you to jump through massive hoops.

The only draw back with age is - Income.

 

Age can come into it when lenders ask how the loan will be paid back and what the exit strategy is...?! (post APRA anyway)