After having spent half of your life working, you have entered the world of over 65 years old, that of seniors, that of retirees! However, for you, retirement does not mean rest and! You decided to take advantage of this period that you consider as a second youth to build all kinds of projects (travel, real estate investment, … etc.). See oryxoman.com for further editorial
Except that the savings of a life, you have done well, they are not enough. So, the idea of applying for a senior loan springs up in your mind. But is not it risky? No, if you know how to borrow despite your 65 years. Follow the guide.
The concept of “senior credit”
For you, retirement is perhaps the time to change your car to travel and travel the country up and down. It may be time to go beyond the borders and explore the unknown. It may also be an opportunity to help your children and grandchildren build a project. Or it’s time to do what you did not have the opportunity to do when you were still employed: you invest in a real estate project, like renovating your home to sink happy days, or acquire a second home to enjoy the sun.
Whatever your project, it is not because you are over 65 and you are retired that you can not borrow. You can claim a consumer credit as a mortgage. No law prohibits you and there is no “senior credit” per se. Years ago, financial institutions found it risky to lend to seniors because of the risk of greater health problems and significantly lower incomes compared to those of a professionally active person.
However, advances in medicine and continuous improvement of care have changed attitudes. On the other hand, retirement pensions are certainly lower, but they are stable.
In theory, banks and other credit institutions rely on two principles to grant a loan. The rules of acceptance concern the debt ratio: as long as you are not indebted to more than a third of your income, you can take out a loan.
It is at the level of the scores that the age intervenes, but it is not the only parameter which the financial organizations take into account. They must also consider your marital status, any children still in your care, your expenses, your other outstanding loans, guarantees and bonds that you can bring, etc. These settings will allow your bank to assess your credit worthiness and the risk of not being reimbursed. Age is not the only criterion for deciding whether or not to give credit.
Where over 60 can be a problem is the amount of the borrower’s insurance with the disability-death insurance. As you can see, the financial institutions believe that the risk of default is not the same for a young person in the prime of life and a person in his old age. And the question of a mortgage is even more delicate because the sums involved are larger and the repayment periods can be longer.
Nevertheless, there are solutions for borrowing well when you are a senior, whether you are considering a personal loan or a mortgage.
How to find the best loan after 60 years?
If you plan to borrow for a trip requiring financing for example about 5000 euros, you can opt for a personal loan. The important thing for you will be to look for a reasonable interest rate so you do not get into debt.
A credit should not prevent you from enjoying your old age in peace. In general, a personal loan is not difficult to obtain, for small amounts, repayable over a short period of time. Be careful, some lending institutions may offer revolving credit (permanent credit or “revolving credit” or “revolving credit”). You will then have very fast financing, renewable from the repayment. However, the interest rate is higher and you risk overconsumption with over-indebtedness.
For a home loan, the conditions are a bit more difficult. In general, if you apply for a loan between 60 and 65, you will have to repay it before 70 years. Unless you agree to take out a death and disability insurance. Such a guarantee will delay the repayment period to 85 or even 90 years. While this is not a legal requirement, banks will be more reassured about your retirement profile, since your insurer will reimburse them. Such insurance has a certain cost and imposes constraints (medical examinations), but it is the best way to obtain credit after 60 years.
Otherwise, you can use your possessions as collateral. It can be your real estate (construction, land, rented or not). You can then consider a mortgage where the mortgage of your property will serve as a guarantee. Note that a mortgage life loan allows you to enjoy your loan and your property at the same time, since your creditor will only be reimbursed upon your death. You will therefore opt for this formula if you live on your property, you have no heir and you need cash for medical care or home service … etc.
If you do not own real estate but want to buy one, you can take your other assets. You can pledge your savings as your home savings account, but also any financial investment: a life insurance, a securities account, a stock savings plan (PEA) … Some remarks: if you use your home savings account , consider negotiating the amount of your credit taking into account the interest earned during the term of the savings. If you want to borrow on your life insurance, you must know that this advance must be paid in full before the deadline. It will therefore be necessary to ensure that a return of money occurs at this time.
You can also consider other goods as input: your car, valuables … etc. Be careful, however, as long as you do not pay your debts, your creditor will be somehow the owner of your property, so instead take risk-free assets.
With these elements, go to an online credit comparison tool. Thanks to a targeted questionnaire, you will have a better vision of the offers and you will be able to choose the most adapted to your financial conditions. With the list of your contributions, make a simulation for each offer. Select the three or even the best four and do not forget to save a copy. Then, ask for personalized quotes. Comparing these with your simulations, surprises may appear, because finally, the offer of a credit agency will prove more advantageous than another. However, if you want to stay with your usual bank despite a slight difference in your disfavor, your research will eventually negotiate your monthly payments by playing the competition.
The final word
Depending on your project and your contributions, study the market well to choose the offer most adapted to your financial and personal conditions. If necessary and / or if possible, do not hesitate to use a credit broker to help you in your research and advise you.
If you do not have a contribution, you may need to consider a personal loan rather than a loan from conventional financial institutions. However, be careful with credits from family and relatives, because they can rub off on your relationship.