How difficult is it to get a bond after 45?

SOUTH Africa’s National Credit Act stipulates that you cannot be discriminated against when applying for finance on the grounds of age, (among other things), but the borrower must pass an affordability test. This means the person’s risk profile is the biggest determining factor when banks consider applications from older borrowers.

“What we are seeing,” says Jason Shaw, Pam Golding Properties national sales executive, “is that banks are typically looking for larger deposits for older buyers who apply for bonds that would extend beyond retirement age.” Shaw says banks also look at the possibility of a shorter term of the loan, “which then raises the monthly instalment amounts”.

Simphiwe Madikizela, head of special projects at FNB Housing Finance, says FNB allows customers to pay a bond until the age of 75 depending on their income and affordability levels. This allows customers to apply until the age of 55 years.

“By making an extra payment in addition to their minimum monthly instalment, customers can reduce the normal repayment period from 20 to 10 years or even less depending on what they can afford.

“The bank also allows customers to use their pension funds as security for a home loan. Pension-backed home loans are more affordable as the interest rate would be below prime. The pension can also be used as a deposit for the home loan which further enhances affordability.”

Experts advise considering buying a cheaper home to bring down repayment cost.