Some dreams come true late in life. Some only buy their own four walls when they are 50 instead of 30. What are the consequences for financing?
50 is the new 30 – this applies not only to the milestone birthday, but also to mortgage lending. Customers over the age of 50 are usually as popular with banks as younger customers used to be. Gone are the days when older people had to fear that they would no longer be able to get a loan simply because of the number of years they lived. Today the financial institutions have recognized the advantages of this clientele. And there are clear rules on how to deal with older customers.
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Age alone is not a criterion for turning down a loan
Age alone is not an obstacle to lending, found out the Stiftung Warentest in a survey of 73 mortgage lenders at the beginning of this year. The Bremen consumer advice center is also observing this trend. “If a loan is declined, it is more for reasons of creditworthiness than for reasons of age,” says consultant Anke Behn.
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However, since age is an important feature in determining creditworthiness, it is indirectly included in the assessment of creditworthiness. “You can’t ignore the fact that the remaining life expectancy of over 50-year-olds is on average significantly lower than that of 20 or 30-year-olds,” says Dirk Stein from Association of German Banks. The runtimes for older customers were generally shorter than for younger customers.
Credit debts must be repayable even in old age
There is no official maximum age for real estate loans. However, according to EU mortgage lending directives, banks must ensure that the borrower can repay his loan debt in full within his statistical life expectancy.
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Banks often use the borrower’s 75th birthday as the date by which the loan for pensioners must be repaid, ”explains Kai Weber from Dr. Klein Baufinanzierung. So if you want to finance a house in your mid-50s, you still have time.
However, the EU real estate credit line also has disadvantages for older customers. “In contrast to the time before, the location of the planned property, the value of existing residential property or the life situation of the potential borrower are no longer taken into account. The main focus is on creditworthiness and age, ”emphasizes Kai Weber.
Plan the term of the financing well
Owners who take on mortgage lending at an older age should be aware that their financial circumstances will change when they retire. In many cases the monthly budget is then significantly smaller than before. “The aim should be to have the construction financing as complete as possible by the age of 65 or 67,” advises Kai Weber.
Consumer advocate Anke Behn also sees it that way. “Some borrowers are not aware of how much lower the pension will be compared to previous income. This could lead to some financial difficulties. “
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Flexibility is important
Those who rely on paying off the loan beyond retirement age should agree on flexible financing. There is the option of paying significantly lower installments after retirement than before. The customer can agree on higher rates for the first few years of the loan period if he is still working. If he then retires, the rate drops.
A repayment rate change or special repayments are also possible, for example if life insurance is due. The monthly burden decreases with age. “However, the customer must agree on this flexibility of financing with the bank before signing a contract. It cannot be made up for later, ”says Stein.
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