A Guide To Home Loans For Seniors

Yes, seniors can still qualify for home loans. While there’s no legal age limit for taking out a mortgage, borrowers over the age of 55 may face stricter lending criteria. This could include showing a solid exit strategy and proving they have sufficient income or assets to cover repayments. This is because most home loan terms run for 25-30 years, and you’ll need to prove you can repay your loan for all of that period, even after you retire.

Can senior citizens or pensioners apply for home loans?

Lenders need to ensure that you can make repayments throughout your mortgage term. They will consider:

• Income: current employment, pensions, or investment returns.

• Outgoings: existing debt, living expenses, and other financial obligations.

• Assets: property (including any equity), savings, superannuation, and investments.

Exit strategy: A clear plan for repaying the mortgage post-retirement, such as using superannuation or selling assets.

Get key information on reverse mortgages in our fact sheet here

 Can pensioners and retirees get a home loan?

Yes, pensioners and retirees can apply for a home loan. However, they may face more restrictions. Lenders will review:

• The stability of your income.

• Your overall debt-to-income ratio.

• Your ability to pay off the mortgage within a specified timeframe (e.g., by age 75).

Important note: If you’re applying for a traditional home loan, you may find yourself subject to a higher interest rate and lower borrowing limit than younger borrowers. If you’re on the age pension or another type of Centrelink payment, this can still be used as part of your income, but approval may be more difficult. You may also have to agree to a shorter loan term (e.g. 10-15 years), which means your repayments will be higher than if your loan was spread over the usual 25-30 years).

What are the risks of borrowing as a senior?

Some of the key risks for you can include:

• Financial stress: changes in your health, income, or employment can make it difficult to repay your loan.

• High interest rates: Seniors may be charged higher interest rates than younger borrowers, which can increase the cost of your borrowing.

• Foreclosure risk: if you’re unable to meet your repayments, your lender may take ownership of the home.

Tips to minimise your risk:

• Opt for a shorter loan term.

• Ensure your credit score is in good standing.

• Have a detailed and realistic exit strategy.

Are there government home loans for seniors?

Yes, the Home Equity Access Scheme offers Australian pensioners an opportunity to boost their retirement income through a government-backed, voluntary loan. This loan is non-taxable and leverages the equity in your Australian home as collateral.

The scheme allows eligible individuals and couples to access funds by using the equity in their home. Borrowers can choose to receive their loan amount as: 

• Regular fortnightly payments

• One-time lump sum

• A combination of both.

If you’re interested in the Home Equity Access Scheme and you’re a veteran, you can explore application options and additional resources through the Department of Veterans’ Affairs (DVA) website.

How much can you borrow through the Home Equity Access Scheme?

Determine your eligibility to participate in the scheme here. Estimate the amount you can borrow based on your home equity here. For the most accurate estimates, use these calculators through your Centrelink online account, if you have one.

What’s the interest rate on the Home Equity Access Scheme?

The loan currently carries a fixed interest rate of 3.95% (as of October 2024) per annum, compounding fortnightly on the outstanding balance until your loan is fully repaid. Note that the longer your repayment period, the more your interest charge accumulates on the loan amount, driving the amount you owe upward.

What’s the ‘no negative equity guarantee’? 

One of the key protections offered under the Home Equity Access scheme is the no negative equity guarantee. This ensures that you will never owe more than the value of your home, even if your home’s market value declines. 

Reverse mortgages also come with negative equity protection. Traditional home equity loans for seniors do not always include this protection. Check with an experienced mortgage broker to be sure.

Is there an age that is considered too old for a home loan?

Technically there is no age that’s considered ‘too old’ for a home loan, however you may find some lenders will decline your application if you’re a senior and unable to prove ongoing post-retirement income.

There’s one thing you can do as a senior to help get your home loan application over the line: write out a complete exit strategy. This includes things like assets you can sell to make repayments (e.g. shares, investment properties), as well as detailed paperwork on your superannuation amount, and any inheritances you’ve received.

Your exit strategy should also include any future plans like continued work (i.e. ability to earn an income), making the length of your loan shorter, downsizing to a smaller/cheaper home, or getting a reverse mortgage to access equity in your home.

Where can I get the best home loan for seniors?

Everybody’s financial situation is different but there are several financial institutions that are happy to lend to seniors, and you may also wish to explore options from specialist and non-traditional lenders. To get started, you can do your own research, hire the services of a mortgage broker, or make life easy by doing everything online.

Compare Club can help you find a home loans for seniors that suits your needs and your personal circumstances. The whole process is quick and hassle-free, and you can get started today. If you’re keen to start the home loan process in your senior years, start comparing lenders right now with Compare Club.

Frequently Asked Questions

Can I borrow against the equity in my current home?

You can - in fact, this is one of the easiest home loans for an older borrower to access and can offer you a wider range of lenders and loan terms. A Compare Club broker can walk you through all the ins and outs of applying for a home equity loan in your fifties, sixties, and even in your seventies.

Is Centrelink an option for getting a loan for seniors?

If you’re receiving the age pension through Centrelink then you may be able to supplement your retirement income with a voluntary non-taxable fortnightly loan. The Pension Loans Scheme is available for aged pensioners with equity in Australian property. In order to take out a home loan as a pensioner or retiree, however, you will need to find a suitable mortgage lender.

What Is the easiest loan type for seniors to get?

Home Equity Loans and Reverse Mortgages are popular options for seniors because they allow your access to your equity without requiring immediate repayments.

Sources

Home loans for pensioners. Govt. legislation Pension loans scheme Superannuation and qualifying for your home loan First home super saver scheme Reverse mortgages and equity loans

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Anthony Stevenson, is the head of home loans at Compare Club. With over a decade of experience under his belt, Anthony is dedicated to helping individuals make informed decisions when choosing a home loan. Whether it's finding a great deal on your home loan or refinancing, Anthony has a wealth of knowledge in the space.

Meet our home loans expert, Anthony Stevenson

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  Refinancing is the smartest, fastest way to lower your repayments and give yourself some breathing room.

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  Home loan pre-approval is not compulsory. It’s possible to begin your home loan application after you’ve found the home you want to buy.