The specificities of the 65-year mortgage
No age limit is imposed by law for taking out a mortgage . The repayment of capital and interest should in principle not take place after the age of 85. Under certain conditions, however, banks can accept loan repayments up to the age of 90. The rate entered in the loan contract is adapted to the profile of the borrower.
Nevertheless, banks are reluctant when it comes to lending to people over 65. Two reasons are given:
However, borrowing after 65 is entirely possible. The cash purchase is not the only solution to realize your real estate project when you are retired. Only the credit conditions can vary according to the financial organizations according to the age of the borrower .
What type of mortgage should you consider when you are over 65?
When you want to realize a real estate project as a senior , several types of loans are possible with solid guarantees:
The classic depreciable loan associated with life insurance because this guarantee reassures the banks . The rate applied may increase with age. To reassure the bank, a pledge can be put in place to cover any unpaid bills;
The mortgage loan : a mortgage offers a solid guarantee to the bank . This solution can be considered if you hold real estate assets;
Mortgage life loan : you mortgage the property you own in order to obtain a loan . Repayment is scheduled until the death of the borrower.
The brakes on the mortgage after 65 years
When banks accept a home loan, they check the repayment capacity of the loan . Those over 65 may find it difficult to get a loan. When you retire, your income will no longer increase. Your borrowing capacity is therefore reduced when you become a senior. Banks can therefore refuse, citing one of these reasons:
The age of the borrower may also lead to higher cost borrower insurance to cover possible health issues. When this insurance is added to the administration fees, the risk of exceeding the rate of wear and tear is very present;
The wear rate or APR is the rate that includes all the costs to be borne by the borrower during a mortgage . This rate is governed by the law which has established a threshold beyond which the bank is no longer authorized to grant mortgages. This cap was put in place to protect borrowers from potential abuse by banks. In January 2022 , this rate is 2.44% . Seniors who wish to borrow after age 65 may therefore come up against this rule. Indeed, if the banks have to exceed this usury rate to cover the perceived risks, you risk being refused a mortgage;
The state of health may be more fragile after the age of 65. If the insurance does not cover all the risks, the bank will be more hesitant to lend the requested amount.
Even if obtaining a mortgage as a senior is more complex, some solutions can circumvent the difficulties mentioned above.
Reduce the cost of credit
For the bank to accept your mortgage application , you must reduce the overall cost of the APR and the loan . There are several methods to achieve this:
Play the competition by taking advantage of the delegation of insurance. Thanks to the Lagarde law , you can opt for an external insurance company that offers loan guarantees equivalent to those offered by the bank but at a more advantageous price;
Reduce the duration of the loan to repay less interest. With a shorter credit, the rate is more advantageous and the overall cost lower;
Increase your personal contribution by exceeding the 10% usually requested by the bank for the granting of a mortgage.
Choose the right insurance
The physical or mental disability guarantee (PTIA) which prevents the exercise of a professional activity or which requires the assistance of a person for the acts of everyday life;
The permanent and partial disability guarantee (IPP) with coverage from 33%.
When you are a senior, optional guarantees are not useful for borrowing the amount necessary for your real estate project. You can therefore not subscribe to them and save on the cost of your borrower insurance and therefore of your overall financing:
The IPT guarantee which covers any physical or mental disability preventing the exercise of one’s professional activity;
To convince the banks to grant you financing after the age of 65, you can also use the services of a mortgage broker. The help of this expert will be useful to you during several stages of the mortgage application:
Build your file in such a way as to highlight your profile and more easily obtain an agreement from the banks for your mortgage;
Explain to you the interest of a borrower’s insurance and the guarantees to subscribe . The mortgage broker helps you find the insurance best suited to your needs;
Obtain a preferential credit rate and advantageous conditions for your loan.
By making an appointment with a broker, you increase your chances of obtaining a mortgage after 65 without having to bear a high rate.
What are the favorite cities of the over 65s for a real estate purchase?
Seniors take out a mortgage in order to settle in a city offering a pleasant quality of life. Seaside resorts such as Nice, Cannes and Marseille are among the cities preferred by retirees. The Côte d’Azur is not the only place popular for its coastal towns. Brittany and the Basque Country also have assets valued by the over 65s.