Home loan hurdles for the mature or self-employed
First-time homebuyers might be f inding it easier than it once was to secure a home loan, but the same cannot be s a i d f or t he mat u r e or s e l femployed.
It is no easy task getting a home loan for those that fall into either of these two categories, and even more difficult if the unfortunate applicant happens to fall into both. Preparation of home loan documentation requirements aside, these applicants can look forward to a signif icantly higher burden of documentation a nd a prolonged application process, unfortunately. For the mature − those in their f ifties or older − the process could be far more difficult than they might have imagined.
The reason? Home loans normally run over a 20-year period with the term of the loan needing to expire at, or not long after, retirement. That’s to enable the homeowner to pay an amount that is comfortably within their disposable income, an income that is generally considerably reduced after retirement. Where it is not possible to grant a 20-year loan due to the applicant’s age, the loan term is shortened and the repayment amount becomes significantly larger. To combat this, a higher deposit is more often than not required.
While application cut-off age varies from bank to bank (some, like Absa and Investec, don’t have a specific age limit), at FNB that age is 65 and the bank’s policy requires the loan to be settled by age 75. “Mature home loan applicants are typically able to put down much greater deposits than newer entrants to the property market. This usually puts them in good stead in terms of the likelihood of being approved for a home loan. Provided that they have managed to maintain a good credit record, they should also typically benefit in terms of