Borrowing After 60: What You Need to Know About Mortgages

Securing a mortgage after age 60 is feasible, as banks frequently approve loans for this demographic. While age is not a barrier, potential borrowers may face shorter loan terms and higher costs, particularly due to insurance expenses. Many seniors have personal funds from property sales, often seeking secondary residences or investments. However, income reduction near retirement and the rising costs of insurance can impact borrowing capacity. Exploring alternative insurance options can help manage overall loan expenses.

Can You Get a Mortgage After 60?

Securing a mortgage for a new real estate project may necessitate obtaining a bank loan, even for individuals aged 60 and above. So, do banks actually approve loans for borrowers in this age group? Let’s explore the conditions under which this is possible.

Is age a determining factor in obtaining a mortgage? As of September 2024, the average age of a mortgage borrower was 38, yet approximately 20% of mortgage loans were granted to individuals aged 60 and older, according to data from Crédit Agricole. Sandrine Allonier, a spokesperson for Vousfinancer, confirms, “With increasing life expectancy, pursuing a new real estate venture at 60 is entirely feasible.”

Understanding Borrowing Conditions for Seniors

Is it challenging to secure a loan after turning 60? According to Allonier, “There are no restrictions preventing this demographic from borrowing.” It is indeed possible to obtain a loan at this age. Typically, banks will lend until the borrower reaches the age of 75, allowing those aged 60 to apply for a loan term of 10 to 15 years.

However, loans taken out by older borrowers tend to be shorter in duration and smaller in amount. “In some instances, loans may extend until the borrower is 85; however, the standard end age is usually 75,” notes Maël Bernier, communication director at Meilleurtaux. Consequently, borrowing at 60 often results in a “shorter loan period than average,” usually between 10 to 15 years, which means that either the loan amounts need to be lower or the monthly payments will be higher.

Many individuals purchasing properties after 60 have significant personal funds to invest, often due to selling a previous property. These transactions are less likely to be first-time purchases and may involve acquiring a secondary residence, downsizing from a primary home, or making an investment in rental properties.

While borrowing at 60 isn’t inherently problematic, two crucial factors come into play. The first is the borrower’s income. “As you approach retirement age, there’s typically an income reduction,” states Allonier. Thus, banks will consider the borrower’s salary during their working years alongside projected retirement income to create a financial plan for the loan.

Another key consideration is the cost of borrower insurance, which can be substantial. Bernier explains, “The closer one gets to the end date of a long-term loan, the more expensive the insurance becomes.” Prospective borrowers should anticipate an additional cost of “between 0.50% to 0.70% on top of the loan rate” for this insurance.

According to Allonier, “The overall cost of credit can escalate quickly for these borrowers.” In some cases, she estimates that insurance can add an extra percentage point to the loan’s interest rate. For instance, a borrower taking a €150,000 mortgage over 15 years with an insurance rate of 0.30% may face an additional €43,207 in total loan costs, including €6,750 for insurance. Conversely, at a 0.70% insurance rate, the total cost would be €52,207, with €15,750 allocated for insurance. At a 1% rate, the total loan cost could reach €58,957, incorporating €22,500 for insurance.

Consequently, borrowers aged 60 can significantly benefit by exploring alternative loan insurance options. However, statistics from Vousfinancer reveal that while 15% of borrowers over 50 seek brokerage services, only 3% are from the over-60 demographic. This group often opts to work directly with their bank, particularly if they have a longstanding relationship with their financial advisor, making them less inclined to compare offers from different lenders.

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