Petal James, Chief of Branches at JN Bank says senior citizens can qualify for mortgage loans just like everyone else.
“It all depends on their income, credit score, and their ability to service the loan. Even seniors into their 70’s can access a mortgage, once they qualify financially,” Miss James informed.
She noted that JN Bank offers an Extended Payment Option, where persons beyond age 70 can acquire a mortgage.
There are varying reasons for which a senior citizen may want to access a mortgage. Some seniors may want to downsize to a single-story home or a property that requires less upkeep or perhaps they want to be closer to family.
Others may even acquire a mortgage to buy a home for their children or may even want a second home for investment purposes.
If you’re 60 years-old or older and thinking about applying for a mortgage, here are a few things to consider:
- What loan term is best for seniors?
Miss James noted that among the things for seniors to consider is how long a loan term they should consider, as for some persons, a 30-year mortgage may be a little long or even unrealistic.
At the same time, a 30-year loan may be the best option for others, based on its lower monthly payments. The length of the term a senior gets could also depend on requirements that are specific to certain loan types, she said.
- The types of mortgages available to seniors
Miss James informed that there are many types of loans available to senior citizens and each satisfies a different need.
Standard Mortgage: This is the traditional mortgage that is available at most institutions. It can last between five and 30 years. Qualifying for it is dependent on your income and your credit rating.
Second Mortgage: A second mortgage is acquired in addition to a primary mortgage and is always for a smaller amount. Second mortgages generally have a shorter tenure and lower than usual financing when compared to its value (LTV) because they are riskier for the lender.
Refinanced Mortgage: This is when you take your current mortgage and refinance it to change the type of loan, the rate, the length of the loan, or any combination of the three.
Reverse Mortgage: A homeowner who is 65 or older and has home equity, can borrow against the value of their home and receive funds as a lump sum, fixed monthly payment or line of credit. Unlike a standard mortgage, a reverse mortgage doesn’t require the homeowner to make any loan payments.
Home Equity Loan: Home equity loans allow homeowners to borrow against the equity in their home. The loan amount is based on the difference between the home’s current market value and the homeowner’s mortgage balance. Home equity loans tend to be fixed rate.
- Get advice before choosing a loan type
Miss James advised that seniors should always seek out well-informed assistance before making any financial decision. “This may mean looking outside of their circle of friends and family for a trusted and impartial attorney or financial advisor who understands the fine print,” she stated.
Here are a few tips that seniors should bear in mind:
- Read and understand the fine print (or find someone who does) before you sign anything
- Take your time to decide. Don’t let anyone rush you into a decision
- Get independent legal advice
