There is a widespread belief that retirees or seniors find it extremely difficult, if not impossible, to obtain a loan. Admittedly, many banks draw a line from a certain age of the borrower and refuse to grant a loan – but by no means all banks behave in this way: there are insurance companies and credit institutions that offer very special offers in the area of mortgage lending for senior citizens – key words pension mortgage.
Widespread behavior of banks is incomprehensible
It’s because pensioners have a regular income and run the risk of being unable to pay the credit rates due to unemployment or incapacity to work. The often-cited argument of the risk of death can quickly be invalidated by taking out residual debt insurance – there are actually no reasonable reasons to persuade pensioners to refrain from borrowing so persistently or to reduce the amount of loan and the repayment period in such a way if a loan approval has been granted.
As is known, the construction financing of Securelife Finance is aimed at very specific target groups – it is not surprising that the offer of a bond mortgage is also surprising: the fixed interest rate, which is lifelong, ensures that liquidity is available even in old acts. As a security, a debit-free property is loaned, the repayment rate can be adjusted individually, which gives the borrower flexibility. It is worth mentioning that Securelife Finance does not seem to want to sell its customers unnecessary supplementary insurance.
Conclusion: It is not necessarily difficult for pensioners or senior citizens who can provide appropriate collateral, such as a debit-free property, to obtain financing, even with a large loan amount. However, it happens that, despite the existence of sufficient collateral, the banks require the borrower to get more equity from a certain age – this age limit is often between 60 and 65 years. If they do not require equity, a special residual debt insurance is usually required, which, the older the insured, the more expensive it becomes. It can even happen that the bank requests a signature of the heir of the property on the loan agreement.
Such a loan is in fact a reverse mortgage, which is hardly known in Germany and is widespread in other countries, such as “reverse mortage” in the United States.