The combination of an aging population and people staying active and healthy into their “retirement years” means more and more older people will be seeking mortgages in the coming years. Some may want to help their kids or grand kids out, and some may want to buy new homes of their own. But how old is too old, when it comes to mortgages?
Age Shouldn’t Matter
According to the Human Rights Act of Canada, it’s against the law to discriminate against someone based on their age. So it shouldn’t matter hold old someone is, as long as they meet the financial requirements set out by the lenders.
Of course, shouldn’t and doesn’t are two different things, and only lenders really know if they’ve ever held back on approving a mortgage because of someone’s age.
Many elderly people continue to work at jobs or in their own business, so income still comes in when others are on fixed income budgets.
Naturally, there are certain risks associated with older people getting mortgages. Those living on a fixed retirement income may have trouble making regular mortgage payments, especially if there are medications and similar costs to consider. If it is a married couple trying to get a mortgage, the death of one spouse in the future could make a big dent in the monthly income, affecting the surviving spouse’s ability to make the payments.
If the success of the mortgage is based on several different factors all working out perfectly, then the balance might be a little too much for the lender’s comfort. Even though it’s not legal to discriminate against someone because of their age, a lender still wants to know that they’ll be paid back, so it has to make sense in that regard.
Going In Reverse
Many older homeowners are opting for reverse mortgages when they need extra money later in life. These loans are for homeowners who are at least 55 years old, with secured equity in your home. This could mean you own the entire home outright, or have a sizable portion of it paid off. And since this is often the case with elderly homeowners, the reverse mortgage is a popular choice.
The loan is given by a home mortgage lender and the homeowner doesn’t have to sell the house. There are also no payments, because the equity in the house is what eventually pays the loan back. Reverse mortgages can be in amounts that are up to 50% of the current value of the house. This helps solve the current income issue, future income issue and payment issue. Many older people take out reverse mortgages to have money during their golden years.
Whatever method is used, older people must take the time to consider their situation before taking out any type of mortgage. Even if the lender agrees to give you the loan, make sure it fits in with your lifestyle before you take on that extra expense. Figure out if it is really necessary and how it will affect your quality of life.
I am Eric Jones, a businessman by profession. Business and entrepreneurship are my passion and I love researching on the various aspects of those areas. I make sure that I don’t miss out any updates and for this reason I read quite a lot. Law is yet another area which I am passionate to know more about.