Not only does life begin at the age of 66, but also the desire to remodel or modernize one’s own home or to buy a property for the first time. Because people in Germany are getting older and older, the issue of creditworthiness in old age has played an important role for years. For a while it was almost impossible for older people to get a real estate loan because an EU directive required the loan to be repaid in full while they were still alive. Many banks resisted this. In 2018, the cumbersome term of the “real estate creditworthiness assessment guidelines regulation” brought some relief.
With or without an age limit
Nevertheless: The loan request of people over 55 years of age is not a sure-fire success. Michael Neumann, CEO of the financial services provider Dr. Klein, emphasizes: “It can be a little more difficult for older people because the banks deal with the issue of age very differently.” He advises inquiries from several financial institutions. “There are many banks that have no age limit and grant customers real estate loans well into old age.” The only requirement is that the monthly rate can be paid at any time, even in retirement.
Regardless, older borrowers should keep a few things in mind. The guideline put forward by consumer advocates remains unchanged: By the time you retire, you should have a manageable residual debt. Bringing as much equity as possible into the financing makes this undertaking much easier. This is also explained by Marc-Philipp Unger, Head of Financing at MLP (see interview). Basically, every prospective debtor should make a cash fall before borrowing. That protects against financial overload. This is where insurance brokers come into play, who are of course experienced in matters of private financial planning.
Accessibility Credit
Mirjam Mohr, Head of Private Customers at Interhyp, knows the reasons for taking out a real estate loan in old age: In addition to the purchase and follow-up financing, the modernization of a property should be mentioned here. “In the consultation we observe that barrier-free living plays a role,” says the specialist. Another reason is the procurement of liquidity. Older people used their paid off home to improve their financial situation. The proportion of people over 55 in all loans to raise capital is around 30 percent. When raising capital, the property is loaned and the loan amount is paid out in return. The property serves as security for a low-interest loan compared to a consumer loan. Mohr says: “With the money, older people want to support children or fulfill their wishes, for example.” This is also interesting from a broker’s point of view, as people over 55 can mobilize money for important insurance cover in this way – for example a private care policy.
Page 1: Loans to raise capital
Page 2: High repayment is important
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