Tips for Over 50 Property Investors

Over 50 and Looking to Invest in Property

When the term of a loan extends beyond the expected retirement age, lenders require a clear exit strategy. At Attrib Solutions, we help over 50’s navigate the wide range of lending policies around acceptable exit strategies and connect you with lenders who are flexible in this area.

Loan Term

For borrowers over 50 years old who do not have a strong exit strategy, some lenders may require a shorter loan term. While this results in higher repayments, it doesn’t necessarily have to be the final solution. It is possible to refinance to a longer term later, once your overall financial position has improved.

Examples of an Exit Strategy

An exit strategy must clearly and plausibly explain how the mortgage will be repaid on retirement.

• Selling your primary place of residence is not an acceptable exit strategy, as it would leave you without a place to live.
• Selling an investment property to repay the mortgage on your home is acceptable.
• Use of superannuation is allowed provided the balance is sufficient to:
  • Fully repay the loan at retirement, or
  • Generate annuity income that can meet ongoing repayments for the life of the loan.

 

Does Age Impact How Much You Can Borrow?

Yes and no.

Your income determines borrowing capacity, as it supports your ability to repay the loan. If you’re required to take a shorter loan term due to age, your repayments will be higher. This means you’ll either need more income to borrow the same amount or on the same income be able to borrow less.

 

Case Study

Male applicant, 53 years old, Australian citizen but newly arrived in Australia, so held little superannuation and had no property ownership to date. A high-income earner with $120,000 in savings.

• Purchased an investment property with an 18-year loan term so that repayments would end at retirement.

 

Female applicant, 56 years old, sister of the male applicant. She had a strong superannuation balance, was also a high-income earner, and had $120,000 in savings.

• Purchased another investment property jointly with her brother under a property share arrangement (50/50 split).

• A 30-year term was allowed for both the male and female applicants.

 

Exit strategies:

• The male applicant plans to sell his first investment property to repay the smaller debt on the second investment property at retirement.

• The female applicant’s superannuation was sufficient to repay her share of the loan at retirement.

The male applicant was able to refinance his initial 18-year term loan to a 30-year term due to the second investment property purchase.

Your property investment journey should be exciting, rewarding, and tailored to your lifestyle.

We’re here to help turn your financial goals into reality, together. You can count on us to be by your side, every step of the way.