Income drops as people age to retirement. Seniors may find it difficult to finance real estate projects. You may also need to have higher levels of borrower insurance if you are older than 60.
Only 12% of borrowers at Vousfinancer are over 50 in 2020, compared with 17% in 2019. This is a declining number in light of tighter credit conditions, including a lower debt ratio maximum (now at 35%) and a decrease in the usury, the maximum rate banks can not lend money beyond. Only 3% of those over 60 are eligible for credit.
Empruntis's loan broker in 2021 found that 50/59 year-olds represented 8.40%, while only 2.11% of borrowers was 60 or older.
Senior citizens have incomes that are expected to decrease when they retire. Youfinance states that almost all banks require an estimate of the pension amount when a person applies for a mortgage. To calculate the rate of retirement, the bank will take into consideration the borrower's age and the date of his retirement. indebtedness.
Sandrine Allonier (director of studies at Vousfinancer) suggests one solution: a tiered loan. This allows the maturity of credit to be lowered 30% at retirement. "And therefore, to adapt your monthly payment to the drop in income to keep despite all, a comfortable level of living."
"Loan insurance is a key topic for seniors looking to invest in real property. The older you get the more likely it is that you will have health issues, so the cost of insurance is higher ...",," Julie Bachet (Managing Director of Vousfinancer).
Due to the higher loan insurance rate and the shorter loan period for seniors (15 years), the insurance weight is greater than the usury, which is the maximum rate banks cannot lend money. This could lead to loan rejections. Sandrine Allonier says that one solution is to find a bank where death insurance is not mandatory and thus not included in the APR calculation.
Alternativly, you can insure only the healthy or younger spouse.
According to Vousfinancer seniors are more interested in borrowing than in mobilizing their investment funds if they wish to invest in real property. There are many reasons why this is so:
* Seniors are good candidates for banks as they can borrow for short periods, have life insurance, contributions or ownership, which offers bank guarantees. Additionally, their charges are often lower since they don't have dependent children Sandrine Allonier.
* The rates are extremely low, particularly for short term terms. They average 0.8% over 10 year, 1% over 15 year, and 1.20% over twenty years. Credit rates don't depend on age (exceptionally for those below 35), but on income or contribution. Senior citizens are not subject to a credit rate increase.
They can borrow to increase their assets and take advantage of the credit's leverage effect.
* The property can be fully repaid by the insurance in the event of death and then passed on to the heirs. Vousfinancer says that it is also a way to plan for your succession.
