Friday September 6 2019

Over 40? Do you have an exit strategy?

This article was published by InfoChoice and appears originally, here.


Life is meant to begin at 40.

You’re older. Wiser. Better equipped to deal with the world and what it throws at you, except, apparently, when it comes to obtaining a mortgage.

The stumbling block if you are over 40, is a bank’s requirement for an exit strategy. Essentially, to meet their obligations under the NCCP (National Consumer Credit Protection Act 2011), the banks want to know that when you hit retirement, you still have the means to pay for your home.

Subsequently, the over 40 demographic, which, generally speaking, has money in the bank and a collectively decent income, is pretty much in the same boat as millennials (who are deemed to be paying too much for avocado on toast and not saving for a deposit), when it comes to buying a home.

That’s not to say you won’t get a loan. You just have to meet certain criteria.

Brendan Dixon, Managing Director of Sydney-based Pure Finance explains, “If your home loan term continues beyond the retirement age of 65, you will require an exit strategy. This is required because of a provision in the NCCP that a loan will be presumed unsuitable if it could only be repaid from the sale of the family home.

“To be clear, this is in relation to owner occupied property loans and is not as big of an issue for investment properties because the exit strategy in that case is to sell the investment and this doesn’t impact the customer’s living arrangements.”


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