Home Loans for Over 60s

If you’re wondering if it’s possible to get a home loan and borrow money in your 60s – the answer is yes! Savvy shows you how.

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, updated on August 8th, 2023       

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Taking out another home loan when you’re in your 60s may seem a little daunting, but there are many options available to you depending on your income.  There is no home loan age limit in Australia, and home loans for over 60s or for pensioners on Centrelink do exist.  Savvy can help you compare lenders and find a loan solution that is most suitable to your personal circumstances.

How do I get a home loan as an over-60?

Getting approved for a home loan if you’re over 60 is the same as at any other age – you have to convince the lender that you have the capacity to pay back their money, even if you’re considering a short-term mortgage.

It’s possible to get a home loan into your 60’s if any of your children are prepared to act as guarantor for your loan.  This will mean they’ll have to take responsibility and pay your loan if you’re unable to do so.  They’ll need to provide your lender with financial information to prove they are financially stable and have the equity to guarantee your loan.  A guarantor mortgage can be a useful alternative to other more expensive forms of finance, especially if you are considering a short-term mortgage and are in your 60’s.

If you’ve planned for your retirement and have a healthy income stream post-retirement, getting loan approval may not be an issue, as you’ll be able to prove to your lender that you’re able to service the debt.  However, if you’re relying on the aged pension alone to fund your retirement, getting a home loan into your 60s may present slightly more of a problem.

Under the Age Discrimination Act 2004, it is illegal to discriminate against anyone based on their age in Australia, so home loans for over 60s aren’t uncommon in Australia. The same applies for pensioners who receive Centrelink payments – they are able to get loan approval too.

Other methods to secure finance for over 60’s

Home equity loans

Home equity loans are secured loans which use the existing equity in your home as security.  They are also known as second mortgages, equity loans and home equity instalment loans and allow borrowers to borrow up to 80% of their property’s value. They provide a lump sum payment for a fixed rate of interest over a fixed term.  Funds from a home equity loan can be used for renovations, for large purchases such as a caravan or for investments such as a deposit for another property.  They can be taken out in addition to your existing mortgage for over 60s.

 Home equity lines of credit

A home equity line of credit loan operates a bit like a credit card: you’re allowed to withdraw funds from your home equity up to a set limit and pay interest only on the amount you’ve withdrawn.  They can be a useful alternative to a conventional mortgage for the over 60s.  You’re able to make repayments at any time to reduce the interest you pay on the outstanding balance.  Line of credit loans can be useful for aged pensioners who receive half-yearly or quarterly dividends from their investments, and wish to have access to flexible funds in between dividend payouts.

What are some alternative finance options for over 60s?

Reverse mortgages

These are a financial arrangement (also called equity release loans) that allow you to access the home loan equity you’ve built up in your property over the years.  They are called reverse mortgages because unlike traditional mortgages, where the balance that you owe gradually reduces, the balance owed increases over time. The loan is paid off when either you or your beneficiaries sell the property. They are an alternative to short-term mortgages or traditional home loans for over 60s.

Home Equity Access Scheme – finance for veterans

Previously known as the Pension Loan Scheme, the Home Equity Access Scheme is a government scheme which allows pension-aged Australians to access the equity in their property.  It is a reverse equity mortgage scheme which offers a fortnightly income stream to supplement retirement income and charges a flat interest rate of 3.95% p.a.  The scheme tops up your current pension amount to up to 150% of the maximum rate of pension which applies to your circumstances.

To be eligible for this scheme you must be:

  • at an age which qualifies to you receive the aged pension
  • receiving, or eligible to receive, the aged pension
  • not be bankrupt or personally insolvent
  • have property to offer as security for a loan which is covered adequately by insurance

Will a mortgage broker be able to help me get a loan?

Yes, consulting a mortgage broker may well be a good idea to assist you in working out which loan option is the best one for your personal circumstances.  Many mortgage brokers do not charge a fee for their service, as they are paid by the lenders whose products they recommend.  Savvy can also help you compare loans so you choose a loan that’s right for you.

How to increase your chances of loan approval in your 60s

Offer a large deposit

The larger the deposit you are able to offer – more than 20% of the agreed value of the property – the higher your chances of getting loan approval.  This is because people with larger deposits are considered less of a risk than those with smaller deposits.

The closer to 60, the better

Although there is no official home loan age limit in Australia, the closer you are to age 60, the higher your chances of being approved for a home loan.  You shouldn’t leave your application until just before you’re about to retire, as you may get disappointing results.  Although there are home loans for pensioners on Centrelink payments, they are less common than loans for those still in employment.

Display stable and consistent income

Having stable employment reassures a lender that you have the ability to pay back a home loan.  Changing jobs shortly before applying for a home loan is not a good idea, and some lenders have employment criteria which state you must have been in your current job for at least 6 months prior to your loan application.

Opt for a shorter loan term

The shorter your required loan term if you are over 60, the better your chances of getting loan approval.  A lender is far more likely to approve a short-term loan of 5 years or less when the borrower is nearing retirement age, than a 10-year or 20-year loan, so keep your requested loan term as short as possible in your application.

Here are some more of your frequently asked questions about loans for the over 60’s

How long does it take to get a home loan?

Because you’re applying for a loan aged in your 60’s, the loan application process may take a little longer to get approval than normal, so you should allow up to a month after you’ve completed your loan application before you get an answer about loan approval.

Do lenders recognise a disability pension as a form of income?

Yes – a permanent disability pension is recognised by lenders as a form of income and will be counted towards household income during a loan application process.  You may need to provide a lender with confirmation of receipt of the disability pension, which can be obtained by contacting Centrelink.

What is a well-life loan?

A well-life loan is an unsecured loan designed for people aged 60 years and over.  They are usually capped at around $30,000, and are only available to people who own their home, rather than renting a property.  It is possible to defer repayment on a well-life loan until the property is sold, or transition it into a reverse mortgage if required.

Will a reverse mortgage reduce my children’s inheritance?

Yes – a reverse mortgage is a way of using the equity you’ve built up in your home to assist you in the later years of your life.  However, when your property is eventually sold, the loan will be paid off, reducing the amount your children or named beneficiaries may inherit from the sale of your home.

Are interest rates higher for older borrowers?

Lenders are not permitted to discriminate against anyone based on age, so it is not legal to charge higher interest rates to older borrowers.  However, in general interest rates for reverse mortgages and home equity or line of credit loans do tend to be higher than average variable rate loans, but much lower than the interest rate on personal loans or credit cards.

Can I receive my reverse mortgage as a lump sum?

Yes – if you take out a reverse mortgage, you can either receive a lump sum or a regular income stream or a line of credit (or any combination of these possibilities).  Talk to your lender about which option would suit your lifestyle best.  It is always recommended that you seek independent financial advice from a trusted source before contemplating a reverse mortgage.

Can I consolidate other debts with a home loan?

Yes – if you have multiple loans on which you’re paying a higher rate of interest (such as personal or credit card debt) it can be worthwhile taking out a home loan to consolidate all your debts.  This can be especially worthwhile if you have plenty of equity in your property, are still earning an income, and wish to clear off multiple smaller expensive debts.

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