mortgage loans after 65
- Thread starter Francesco
- Start date
I have been told that a lady 65 years old is assets rich but cash poor and so no more mortgage loan is possible. Anyone knows whether this is required by mortgage rule?
I would have thought cashflow poor at any age would mean no mortgage, regardless of assets.
You only need so much equity, but you need adequate and stable cashflow to service a mortgage.
I imagine if the 65yo converted those assets to income producing it would be a different story.
I have been told that a lady 65 years old is assets rich but cash poor and so no more mortgage loan is possible. Anyone knows whether this is required by mortgage rule?
You have to satisfy the 'responsible lending' rules. So you basically have to demonstrate how they are going to afford the mortgage / pay it back. Often the deal can be done for older people by saying that they intend to sell the house to repay the mortgage and/or some other strategy. It is the opinion of many compliance officers that just relying on the sale of the property is not enough, especially if the property is a PPOR.
Thanks everyone for the response. So, it seems age does not automatically bars one from getting a mortgage loan. It still comes down to serviceability and equity. I was told the old lady intends to sell one of her investment property in Qld so she could purchase one presumably as PPOR. Seems like there is possibility there, especially if the mortgage loan can be covered by sale of one or two properties over 6 months?
This is a 'bridging loan' and they don't require serviceability anyway because the loan terms are very short.
I have been told that a lady 65 years old is assets rich but cash poor and so no more mortgage loan is possible. Anyone knows whether this is required by mortgage rule?
We may be able to convert some of the assets to income ........................
ta
rolf
You mean sell the Qld property for her within a short time and at a fair price?
It seems we may not have the full story here. If she holds property assets already does she have existing mortgages? I have a mid 60s client who buys and sells properties but keeps the same loan by substituting the security property. That way there isn't a need to reapply for a loan. If the lady concerned is selling one property and buying another don't let her pay out any existing mortgage (if there is one) until she considers security substitution.
She has mortgage loans in her investment portfolio. I do not know her full financial details but it seems she will not be buying the new property as her bid is a bit lower than what vendor is prepared to accept. She has sold her PPOR and is renting at the moment by herself. Thanks for all the ideas and contributions but an old widow can be guided only so far.
Francesco. I see no logic in keeping investment property after 65 if you are wanting to buy a home.
The interest rate on the new loan would be at least 6.5% while NETT return on investments would only be 3% (approx) calculated against current realizable value.
We sold our properties in the last couple of years and are mortgage free. I used some of the cash for improvements and are happy little vegemites. We still have cash in the bank to do maintenance but not so much we don't get a part pension.
If you are not paying a mortgage, get a little income and a part pension things are OK. Far better I suspect, than being perennially short of a dollar because you are paying off loans.
Life doesn't have to be complicated.
I bit my tongue.
Francesco. I see no logic in keeping investment property after 65 if you are wanting to buy a home.
The interest rate on the new loan would be at least 6.5% while NETT return on investments would only be 3% (approx) calculated against current realizable value.
We sold our properties in the last couple of years and are mortgage free. I used some of the cash for improvements and are happy little vegemites. We still have cash in the bank to do maintenance but not so much we don't get a part pension.
If you are not paying a mortgage, get a little income and a part pension things are OK. Far better I suspect, than being perennially short of a dollar because you are paying off loans.
Life doesn't have to be complicated.
Hi SF
There are many strategies and yours will not harmonise with the old lady's or mine. Why keep investment properties after age 65? Many reasons, for one, income stream from SMSF are non taxable after 60.
Why keep investment property when you need to borrow to buy PPOR? I agree you need to sell an investment property. This is the old lady's problem and she has to come round to it.
Why pay mortgage interest when retired? When your pension stream is taxed and NG still has a role to play. Life is as complicated as it needs to be to live in a sophisticated society like Australia where taxes are imposed on everything and you try to look after self, family and a few charities. No part pension or Centrelink benefits for me especially under current govt. but manageable with one or two overseas holidays each year for recreation and charity.
Thanks for your advice.
How about everybody STOPS calling this 65 year old an "old lady"
I apologise to present lady company on SS!
Accepted, Francesco, as long as you don't do it again! By your criteria I'm ancient!I apologise to present lady company on SS!
cheers
