mortgage loans after 65

[Francesco]

Accepted, Francesco, as long as you don't do it again! By your criteria I'm ancient!

cheers

Feeling very contrite! What can I say - I like matured ladies. They have spunk and style but I think many are vulnerable financially especially when their partner has departed and leaves them a property portfolio to manage. It would be a daunting task for matured ladies, who have to pick up the loose ends left by their partner and deal with finances and taxes or arranging for overseas travel.

Not a problem of course to most ladies at SS.

 

[itinerantotter]

Not a problem of course to most ladies at SS.

You got it! If I fell off the perch, heaven forbid, my husband would be the helpless one.

cheers

 

[marg4000]

You got it! If I fell off the perch, heaven forbid, my husband would be the helpless one.

cheers

Same here!
Marg

 

[wylie]

You got it! If I fell off the perch, heaven forbid, my husband would be the helpless one.

cheers

Same here too

 

[savoys]

Feeling very contrite! What can I say - I like matured ladies. They have spunk and style but I think many are vulnerable financially especially when their partner has departed and leaves them a property portfolio to manage. It would be a daunting task for matured ladies, who have to pick up the loose ends left by their partner and deal with finances and taxes or arranging for overseas travel.

Not a problem of course to most ladies at SS.

Disagree completly. might have been the case 30 or so years ago that this generalisation could have some truth to it , not in 2012

 

[Francesco]

Disagree completly. might have been the case 30 or so years ago that this generalisation could have some truth to it , not in 2012

Too bad you disagree. I hope the politicians do not stop making policies based on following views:

"A review of various studies and surveys taken in the United States as well as in other countries shows that not only is literacy low, it is particularly severe among vulnerable groups such as women and the elderly."

From http://www.advisorone.com/2012/02/15/financial-literacy-low-among-vulnerable-population

"Men and women hoping to retire within the next five to ten years are being forced to face a cold truth—they may not be financially prepared to retire. And women are especially vulnerable. Consider these facts about older women from the Administration on Aging:

· In 2001, women accounted for nearly 60 percent of the population age 60 and older, and 70 percent of the population 85 and older.

· Seven out of ten baby-boom women will outlive their husbands.

· Older women are twice as likely as older men to live in poverty, and half of the elderly widows living in poverty were not living in poverty before their husbands died.

· Older women are three times as likely as older men to live alone.

· Most older women depend primarily on Social Security for their retirement income, and are half as likely to receive employer pension benefits as men.

· According to the Census Bureau, retirement income for women over age 65 is just over half of the retirement income received by men in the same age group."

From http://www.blunckfinancial.com/resources/finplanart.php?doc=women vulnerable for retirement.htm

Cheers.

 

[Sunfish]

What has this got to do with your OP Francesco?

You ask for advice and then argue with those who reply.

I think you and your "old" friend should get professional advice, and argue in the time you are paying for. I don't know enough to post on the topic but I think your understanding of Social Security is off the mark. After retirement that is more important than the ATO.

 

[Francesco]

What has this got to do with your OP Francesco?
You ask for advice and then argue with those who reply.

I think you and your "old" friend should get professional advice, and argue in the time you are paying for. I don't know enough to post on the topic but I think your understanding of Social Security is off the mark. After retirement that is more important than the ATO.

My response merely replied to your advice:

[/QUOTE]
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.[/QUOTE]

Re the OP caution, there should be some leeway in talking about age 65 for women and refinancing. Let's not be too legalistic otherwise SS will become sterile when it strays into gray areas. I just produced enough info to point out that your advice does not apply or may not be optimal in some situations and you are put off. I am sorry that you feel that way.


Cheers.

 

[Sunfish]

Ever considered saying that certain advice doesn't fit, graciously? I believe you dismissed what I said too quickly as I too am a part funded retiree and older than your "old" friend. I SOLD my properties and don't regret it.

I have a little experience.

But you're on your own. C 'ya.

 

[Aaron Sice]

i think, considering most people now work into 70-75, this is a stupid age bracket to apply a limit to.

why would someone retire with a mortgage? makes no sense.

 

[Francesco]

i think, considering most people now work into 70-75, this is a stupid age bracket to apply a limit to.

why would someone retire with a mortgage? makes no sense.

Let's discuss a hypothetical situation. If a young person is a salaried employee and has an adequate salary, not much assets, but investments in either shares or property. NG helps with shares and IP investments while the nest egg is built.

After many years of accumulation in employer pension and own investment properties, the employee approaches pensionable age. There are lots of equity in assets (SMSF and own property portfolio) as well as a nice employer pension. The assets and the employer pension (not including rental income) preclude him from government part pension on both assets and income test. The employee is of pensionable age, maybe 60 and still young as most SS forumers pointed out. Should the investment properties be cashed out for alternative investment choices? This is a preference and there are big CG tax. Management funds are not that lucrative in returns on an after tax basis. The employer pension is adequate but is exposed to PAYG tax.


The 60 year old can invest in the SMSF and in return receive non taxable income from a pension account for shares and properties. This is in addition to mortgaged IPs in personal names which are all approaching CF positive or neutral because interest rates are not that high. So, rental income can still offer a tax effective income stream in an approach using OPM.

There will definitely be a time when no mortgage is better, especially when senility creeps up.

 

[Token Funder]

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?

ASIC have provided guidance on lending to *ahem* older Australians last year:



ASIC has updated Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209). The updated regulatory guide provides further guidance and clarity for lenders on assessing borrowers' capacity to repay under the responsible lending requirements of the National Consumer Credit Protection Act 2009 (National Credit Act).

ASIC Commissioner Peter Boxall said: 'We are concerned by reports of older borrowers whose employment will reduce, or cease, before the end of the loan term, being refused loans because some lenders are adopting an unnecessarily restrictive approach to meeting the responsible lending requirements. Undertaking the range of enquiries required by the legislation will often reveal other ways that they will be able to repay the loan.'

'The new responsible lending requirements in the National Credit Act are an important protection for consumers, but they should not be an inflexible barrier to credit for any segment of the population, and should not prevent consumers obtaining credit that they can reasonably afford.'

The changes that ASIC has made include:
clarifying that a conclusion of substantial hardship (where a borrower appears to have no obvious continued income stream for the full life of the credit contract) can often be rebutted with reasonable enquiries about the borrower's financial situation, requirements, and objectives. Further guidance and examples: see RG 209.27(g) and (h), RG 209.69-RG 209.71 and new examples 6 and 7
providing further guidance on issues a lender should consider when assessing the relevance of income from a person - other than the borrower - in assessing the borrower's capacity to repay. See RG 209.27(j) and the related footnote and RG 209. 89

 

[Rolf Latham]

'The new responsible lending requirements in the National Credit Act are an important protection for consumers, but they should not be an inflexible barrier to credit for any segment of the population, and should not prevent consumers obtaining credit that they can reasonably afford.'

way too late for many.

ASIC cant expect adherence to grey rules, where the regs dont spell out what is reasonable. As a result, lenders and brokers will be forced to still discriminate on the basis of age, and sometime gender.

Is it reasonable for a single 50 year old with 50 k super to take a 30 year mortgage on a PPOR of 200 k on a property worth 500 k today ?

Many would argue NO, since downsizing involves sale of the primary residence, which can be construed by many to be "unreasonable"

ta

rolf

 

[Francesco]

...ASIC Commissioner Peter Boxall said: 'We are concerned by reports of older borrowers whose employment will reduce, or cease, before the end of the loan term, being refused loans because some lenders are adopting an unnecessarily restrictive approach to meeting the responsible lending requirements. Undertaking the range of enquiries required by the legislation will often reveal other ways that they will be able to repay the loan.'

'The new responsible lending requirements in the National Credit Act are an important protection for consumers, but they should not be an inflexible barrier to credit for any segment of the population, and should not prevent consumers obtaining credit that they can reasonably afford.'
...

An example of the balanced deliberation for all segments of the population of a former departmental head in Canberra.

 

[Token Funder]

way too late for many.

ASIC cant expect adherence to grey rules, where the regs dont spell out what is reasonable. As a result, lenders and brokers will be forced to still discriminate on the basis of age, and sometime gender.

Is it reasonable for a single 50 year old with 50 k super to take a 30 year mortgage on a PPOR of 200 k on a property worth 500 k today ?

Many would argue NO, since downsizing involves sale of the primary residence, which can be construed by many to be "unreasonable"

ta

rolf

Actually, in RG 209 ASIC specifically give an example of an older borrower being capable of servicing now, losing that income in the foreseeable future and intending to downsize at a later date as the exit plan. Not unsuitable, sayeth ASIC

 

[Rolf Latham]

Actually, in RG 209 ASIC specifically give an example of an older borrower being capable of servicing now, losing that income in the foreseeable future and intending to downsize at a later date as the exit plan. Not unsuitable, sayeth ASIC

so not not unsuitable or not unsuitable, or suitable...............

the challenge with much of the regulation and the regulatory guides is exactly that............guidance provides one with little comfort.

I know what loans I write, and what exits are available to clients, and always have done.

Downsizing intent and reality may prove difficult at the margins though. Obviously gearing down from a 5 bed house at Northbridge to a one bedder in Cabramatta should work well on the figures. But downsizing from a 2 bedder in Cabramatta to the local Van park is def grey.

try and sell RG 209 to the mortgage insurers

ta
rolf

 

[Aaron_C]

Not sure why we're being told how to lend out money by people who have never borrowed money before. Bring on the muppet show...

 

[Ocean Architect]

Are you so far removed that you don't see the scam?

If you rope a younger person into a loan, you skim their wages until later middle age. That makes your profit.

If you rope an older person into a loan, you don't care about the short term payments - all you care about is the death balloon payment.

This isn't hard, ladies and gentlemen. Your problem is that your eyes are closed as per the bastids of this world.

If i were a banker in the 50s, I'd be hooking people up with 40 year mortgages to make money on long term interest. If I were a banker in 2012, I'd be hooking people up with cheap month to month mortgages, with huge exit hooks, especially upon death.

This is not a complicated idea, O Supposed Clever Investors.

Embarrassing, man.

 

[Rolf Latham]

And just how does a +_ $ 500 admin mortgage discharge exit fee make you wealthy as a 2012 banker ??

ta

rolf

 

[Francesco]

Actually, in RG 209 ASIC specifically give an example of an older borrower being capable of servicing now, losing that income in the foreseeable future and intending to downsize at a later date as the exit plan. Not unsuitable, sayeth ASIC

TF

It seems ASIC has opened a can of worms by permitting lending discrimination on the basis of age, not serviceability or financial feasibility.

I understand lenders are taking steps to 'comply with the law' with all sorts of measures including:

1) reducing the loan term (from 15 to 10 yrs), in combination with
2) insisting on Principal and interest repayments instead of IO

Older people can find it hard to refinance to a better loan provider and get more competitive lending terms when the law intimidates loan providers to have less to do with older people. Consequently, there is less competition for provision of loans to older people and when it is available it is at a higher costs. This seems a case of unfair discrimination.

It seems to me that if ASIC wished to safeguard older people from unwise financial investments they could have taken a more direct approach. For example, if older people absolutely do not want to lose certain properties then ASIC could stipulate that lenders must get a declaration from older people nominating that certain assets are to be excluded from serviceability assessment.

The discrimination could be against anyone who is retired regardless of receipt of employer pension. As the legal retirement age for a normal worker starts at 55, the unfair lending discrimination can cover up to 20 years more, ie age 75, consistent with longer working life as people live longer. It seems legitimate investment activities for the 55-75 are unnecessarily obstructed through diminished avenues of borrowing as a result of ASIC's regulations.

I wonder do others agree that there is a perceptible trend of unfair discrimination of the aged in terms of borrowing for investments because of ASICS recent regulations? Perhaps the authorities (ASIC and Commissioner against Age Discrimination) need to be informed of this situation?