Seniors are more and more eager to become owners. This change in behavior of this part of the population, explained in particular by the increase in life expectancy, is a proven fact: the share of seniors in borrower clients is constantly changing and now represents, on the whole, 10 15% of loans, including 20% of mortgages subscribed by people over 60 years.
For the banker, two key points of a senior home loan are therefore:
- the amount of the personal contribution, which must approach 30%
- a shortest duration possible
Senior real estate credit
Unlike the borrower insurance, more complicated for seniors, obtaining a mortgage for senior is rather well received by the banks, the latter enjoying this segment of the population : little spending, managing perfectly his accounts, with even a savings… Banks can then lend until the age of 70 or 75 years, or even up to 90 years for the best contracts.
Note that after age 65, you will usually have to expect an average repayment term of 10 or 15 years. Regarding the senior loan rate, it will not be overvalued according to the age of the borrower, but according to his personal record, in addition to his contribution and income.
Other alternatives for obtaining a senior loan
Mortgage life loan
When the senior is already homeowner, the mortgage life loan can be a gateway to a new loan. This solution is suitable in the case of the purchase of a larger house or located in a geographical area where the price of m² is higher.
During his lifetime, the borrower receives an annuity or capital paid by the bank and repays the loan amount by selling the mortgaged property after the death of the borrower. This type of loan is also very useful to afford a small financial supplement in addition to your retirement income.
The mortgage life loan is only recommended for a borrower without children since they will not be able to inherit the property.
The bonded mortgage
Another possibility is the bonded mortgage. The principle is a bit the same as the life loan, but this time the borrower repays his loan by monthly payment as for a conventional loan. This loan meets the following conditions:
- it is limited to 70% of the selling price
- does not require borrower insurance
- on average it is 0.5% more expensive
Upon the death of the borrower, the bank sells the property to recover the outstanding capital. The heirs then receive the difference between the amount of the sale and the amount of capital remaining to be repaid.
If the heirs wish to keep the property, they can also repay the bank of the outstanding capital.
The bond of another person
It is also possible to solicit a person of his entourage, usually his family, so that it is surety and can repay the outstanding capital.
The AERAS convention
The AERAS (Insuring and Borrowing with an Enhanced Risk of Health) convention is finally another easy access solution to borrowing. In case of a contraction of an aggravated health risk, you will benefit from advantageous conditions for your loan, but also for your credit insurance. On the other hand, you must:
- to be under age 70 at the end of loan repayment
- that the insured portion of the loan does not exceed the amount of 320 000 euros
The borrower insurance, an essential element of the senior loan
For a senior to borrow for a real estate purchase, he must meet criteria for income, but also health.
Nothing very different from a younger borrower, except that revenues tend to fall after retirement and health ri sks are more important. As a result, senior mortgage insurance offers will often be more expensive, forcing the borrower to pay particular attention to disability-death guarantees, the latter being likely to significantly increase the overall price of insurance..
For a long time, insurers have accompanied the senior insurance policies with exclusions. The problem is that this insurance has been emptied of many of its guarantees while being expensive. The trend is different today with more comprehensive insurance, sensitive guarantees being less often excluded while being subject to surcharges calculated according to the age and the state of health of the borrower.
Find a good senior mortgage
Since borrower insurance is usually the most difficult issue for a senior loan in terms of cost, it is essential to save a maximum on your home loan. And what better way to get the most advantageous offer than using our online mortgage simulator!
Hervé’s advice! Monthly payments, rates, fees, duration of the loan… Fill in your situation and your needs, and compare the offers of many specialized establishments according to the most important criteria. The comparison on Harlequin, free and without commitment, will allow you to choose the most economical and the most adapted to your profile.