Today, banks are more willing to grant loans to senior citizens. Don't hesitate to push open the bank's door to negotiate your loan.
There's no age limit to making your dreams come true...
You just have to pay the price
With life expectancy on the rise, it's now possible to borrow at 60, 70 and even beyond. Banks are no longer so cautious, and that's a good thing! Why shouldn't you be able to buy a second home by the sea at 65? It's true that the borrower's age will influence the repayment period. Long-term loans (25 or 30 years) will rarely be granted to retired people. For the bank, the older the borrower, the greater the risk taken. Up to the age of 65, it's relatively easy to borrow. There are even "à la carte" financing packages that provide for lower monthly payments when you retire, coinciding with a drop in income.
From the age of 75-80, everything is still possible, but the loans known as "contrats séniors", which allow you to borrow up to the age of 90, are very expensive. Rates are very high, especially for smokers! The problem is thedeath and disability insurance, not the interest rate. The rate will be similar to that of a 35-year-old borrower. For a young borrower, the cost of death and disability insurance will be between 0.20% and 0.30%, while after the age of 60, it will cost between 0.50% and 0.60%. After the age of 70, it can sometimes exceed 1.75%!
Some banks set age limits for certain loans (those over 10 years). This is a play on words: it's not the age that's limited, but the age the borrower will be when the loan is repaid in full.
Please note!
The mortgage rate does not change with age. It's the rate of death and disability insurance that varies the cost of the loan.
The privilege of age...
It's also an advantage
When you want to borrow at an advanced age, you need to put all the odds on your side when you meet your banker. If you have a small nest egg, you can use it to your advantage to obtain financing. The banker will appreciate this personal contribution.
It is also possible to borrow without insurance. A life insurance policy with substantial savings means you don't need loan insurance. It serves to prove to the bank your ability to repay the loan. It can also be pledged as collateral. In the event of death, the lending institution will be the beneficiary.
For owners of a principal residence who wish to invest in another property, the bank also takes out a mortgage: this amounts to pledging the property already owned as collateral.
The final alternative is more delicate. It involves asking someone you know to act as guarantor... but it's not easy!
Use a broker
Since July 1, 2010, loans and insurance can be separated. You can call on the services of a broker to obtain the best offers from different insurers and take advantage of insurance delegation.
Stéphanie SWIKLINSKY