From a legal point of view, there is no legal age limit for taking out a mortgage. If the procedures are easier for active people, it is possible for seniors over 60 to obtain a real estate loan, but under certain conditions.
The evolution of the life expectancy of the French (having gained 16 years since 60 years, a huge figure compared to the half-year lost because of the pandemic of covid-19) reassures the banking institutions to grant a loan to the seniors. Indeed, 20% of real estate loans are granted to seniors over 60.
First obstacle: the loan insurance
The real estate loan insurances proposed by the banks are more expensive for the elderly, and the coverage is no longer possible beyond the age of 70. Fortunately, the Lagarde law gives seniors the possibility to choose an independent insurance that pushes back the age limit for loan coverage to 85 years old.
Some tips for obtaining a real estate loan
- It is quite tricky to take out a bank loan after the age of 60 (being a “risk profile”). If you want to take out a home loan, you must make sure that the repayment is made before your 85th birthday.
- You must have a regular income that allows you to repay your loan in full after retirement.
- To avoid exceeding the usury rate, you can increase your contribution as much as possible. Generally, it should represent 10% of the price of the property to be acquired. If you make a contribution of more than 20% (the ideal personal contribution is 30%), it would already be a major asset to win your case and could reduce the repayment period.
In favor of the bank, the pledge of a life insurance or securities account, instead of a mortgage or loan insurance, is also a way to obtain a real estate loan easily. The use of these investments is frozen until the loan is repaid in full.
The life mortgage loan
You borrow money from the bank against the mortgage of your property. In the event of death, the bank can resell the property used as collateral to repay the principal and interest.
The guaranteed mortgage loan
Like the pledge and the lifetime mortgage, it replaces the loan insurance. If the borrower dies before the end of the loan, the heir has the choice of repaying the remaining capital or letting the bank sell the mortgaged property.
The guarantee of another person
You ask for the guarantee of a third person (generally a member of your family). This person guarantees to reimburse the remaining capital due in case of death or inability to repay.
The AERAS convention
The AERAS convention facilitates access to loans for people whose State of health does not allow access to standard loan insurance coverage. The person has been, is ill, or is likely to be affected by an illness that exposes him or her to a morbidity or mortality risk higher than the standard of the reference population.
This is an agreement signed by the State, credit institutions, insurers, and associations of patients and consumers. It is strongly recommended that the person with an aggravated health risk choose an insurance policy well before applying for credit. The AERAS convention obliges the insurer to provide a response within three weeks. The conditions to benefit from the AERAS are the following:
- The borrower must be less than 70 years old at the end of the loan
- The insured part of the loan does not exceed the amount of 320 000 €.
Please note that the borrower insurance with health risks is more limited and costs more than classic credit insurance.
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