Obtaining a loan in retirement can be very difficult based on the fact that retirees have low income that may be just enough to finance their daily costs of living but not quite enough to repay a mortgage. Many lenders find it too risky to offer mortgages to retirees, more specifically to those who are sixty-five and older.
There are however a few lenders who do offer a mortgage in retirement . However, there are a number of factors that these lenders consider before agreeing to offer a retiree a mortgage. Some of these factors include the income, the credit history, and cosigning possibilities. Many lenders will base their decision on whether or not the retiree has a fixed source of income such as from a social security or retirement plan that can be used to pay off the mortgage. Having just one source of income may not sufficient to qualify a retiree for a mortgage since that it may not be sufficient to finance his daily living expenses and to repay the mortgage which means that he will need additional sources of income if he wants to obtain a mortgage in retirement.
Most lenders will want to see a credit history of reliable payments made for recent debts. This will make it much easier for the mortgage to be approved. A guarantor is someone who takes over the responsibilities of a mortgage if a retiree can no longer make the payment. Lenders are more willing to offer mortgages to retirees who have a guarantor since that the risks are reduced.
Most lenders who offer mortgages to retirees are still cautious and are still not willing to take all of the risks which is why most of them only offer mortgages to retirees who are not older than seventy or seventy-five years. Offering mortgages to older retirees is much riskier since that there is a greater chance of these retirees dying faster and not being able to repay the mortgage.
In most cases, only equity release providers offer mortgages to retirees older than seventy-five years and this is because the repayment of the mortgage is secured in that once the retiree dies, the property will be sold to repay the mortgage.