Loan when you are a senior citizen
In activity or even retired, more and more seniors resort to credit to finance their projects. Of course, there is always a big obstacle that you can easily guess: The loan insurance. But obviously, life does not stop after sixty years old and it is probably one of the phases of the existence where we have the most projects, whether it is in the acquisition of a second home, renovation work in the main house, the purchase of a new housing more adapted for the future great age which arrives (renovation of bathroom, installation of an elevator, etc). We also think about the development of the children and particularly about the transmission of capital and real estate. Borrowing can therefore appear as an interesting and sometimes even necessary resource. Wrongly, many individuals think that credit organizations no longer finance projects after this age.
What can seduce the bank and help your broker
As we know, among the important criteria that allow access to loans, there is the notion of stability. And after the age of 60, many people benefit from this. There is no longer any risk of unemployment and, in general, you have a fairly comfortable repayment capacity insofar as the housing loan has, in principle, been fully repaid. Often, also, a sixty-year-old has savings from his past activity. Go and find a broker, you will see that he particularly appreciates these aspects in order to negotiate later on; he will advise you, for example, to borrow rather than to use your life insurance, either in advance or in a straightforward redemption.
The only real difficulty, more than the age, is the loan insurance because it is not possible to have a real estate loan without it. A health check will be required (see the rest of the article) and remember that in general, insurance companies cover real estate loans until the borrower is 85 years old. In practice, this means that:
At age sixty, one can expect a twenty-five year loan;
At the age of seventy-five, this is reduced to ten years.
In addition, a compulsory mortgage insurance covers three types of risks: death, disability and inability to work. It is possible to choose whether or not to insure yourself against loss of work. As it is useless after this age, remember that an employee who is made redundant after the age of sixty benefits from the Pôle emploi for a longer period of time, it is possible here to make some savings with your insurer.
Credit solutions for people over 60
The financial arrangements will obviously depend on the project and your repayment capacities, as well as the contributions you make. Also think about the tax system. Regarding this last point, it may be possible to make what is called a credit in fine.
Concrete case :
If you make a rental investment while you pay a lot of taxes, you can consider this type of financing solution. Unlike a classic real estate loan, a bullet loan allows you to pay back a constant amount of interests each month (higher it is true), before paying back the capital in one go at the loan maturity. In the meantime, it is necessary to invest this sum in a savings product. The advantage is that the interest paid to the bank is deducted from the rental income and minimizes the taxable property income throughout the loan period.
The in-depth medical questionnaire
Even if the coverage is less and only concerns death and disability, because of the increased health risks, the real estate loan insurance when you are senior is quite expensive. At the age of sixty, it can increase the credit rate by 1% of the capital borrowed, whereas if you are, for example, between 28 and 30 years old, it is around 0.35% to 0.40%.
Up to the age of sixty, an insurer is satisfied with the client’s answers on a simple health questionnaire. When the age is higher, the procedure seems more invasive for the subscriber: about fifty questions, even a blood test and a more thorough medical examination.