The borrower’s maximum age is one of the important parameters in the case of mortgage loans. In their regulations, banks usually determine at what age the borrower may be in the event of the assumed repayment of the last installment of the mortgage. In the case of young borrowers, this problem does not exist, because the maximum age is usually in the range of 70-75 years. The problem arises if older people are applying for credit. Applying for a loan at the age of 50, which is not uncommon nowadays, may be associated with some complications regarding the loan period. Therefore, I would like to present the policy regarding the maximum age for the borrower in individual banks.
How do banks calculate the borrower’s maximum age?
Banks have an individual approach to the borrower’s age. Some recognize that the maximum age is 67 years, others that as many as 13 years old. The maximum age may affect the shortening of the loan period, which may be quite unfavorable for the borrower due to the significant increase in the installment amount. The table below shows how diverse the approach to the maximum age of the borrower is.
Creditworthiness and the maximum age of the borrower
The borrower’s age is also very important when it comes to calculating creditworthiness. In accordance with the recommendations of the Financial Supervision Authority, banks should estimate the decline in income after retirement. Then it should be taken into account when estimating creditworthiness. The approach to this topic, however, depends on the bank.
Does the age of the oldest borrower count in every case?
Not always. In several banks, if the income of the oldest person is definitely lower or unnecessary to obtain creditworthiness, it is possible that the loan period does not depend on the age of that person.
Mortgage with parents
From time to time, customers want to save their creditworthiness by entering into a commitment with their parents. Not everyone knows that the age of parents can cause a shortening of the loan period, and thus a significant increase in installments against the possibilities. It is therefore worth considering whether this type of solution makes sense.
A bank granting a loan to a person whose age + maximum loan period in a given bank is close to the maximum age limit may request life insurance with assignment to the bank, although it usually does not use such collateral. Such a requirement may significantly increase the total cost of credit, as life insurance premiums are correlated with age. The more old a person is, the higher the premium will be. This is related to the CSO mortality rates. The older the person, the higher the likelihood of a negative event.
Even if you are already at an advanced age or planning to take out a loan with your parent, this does not mean that you will not get funding. As I have proven on the blog more than once, a mortgage is a resultant of several dozen parameters. The maximum age is one of them. You should carefully analyze the situation, because not every bank will be able to offer you a solution. I have carried out mortgage loans for people close to 70 years old. Yes, these are limited options, but it is possible.