Refinancing your home when you’re over 50: What you need to know

Did you know that refinancing your existing home loan may become a little more complicated once you’re over the age of 50? Lenders will in some cases reduce the maximum loan term to match your anticipated remaining working life (usually to age 65). Monthly repayments on a standard loan are usually calculated over a 30-year term. Could you afford monthly repayments based on a 15-year term? What are your options?

1. Exit Strategy

Lenders need to ensure that you are able to repay your loan prior to, or at retirement. Over the age of 50, as part of your loan application, you will be required to provide a written exit strategy. Common exit strategies include the sale of assets such as an investment property, downsizing your existing home or using your some of your superannuation, or a combination of these. Note, lenders will be cautious using superannuation because your superannuation is there primarily to fund your retirement, not pay off your loans.

2. Lender policy

If your loan is to be secured by your owner-occupied property, you must be able to show that you can repay the loan prior to retirement without incurring financial hardship. Selling your owner-occupied property to repay the loan would be considered by all lenders as “financial hardship”. Downsizing to a smaller property may be considered acceptable by some lenders. It is our job as your finance expert to know which lender will suit you best.

3. Speak to your broker

Lenders have different policies when assessing eligibility to refinance over the age of 50. Your mortgage broker will help you navigate lender policy and prepare an exit strategy to give you the best chance of having your application approved. Speak to a member of our highly qualified team at Launch Finance today.

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