Friday , January 15 2021

Are you too old to take out a mortgage?

Contrary to popular belief, there is no age limit for getting a mortgage.

It is not your age, but rather your ability to repay that is taken into account by the bank in deciding whether you qualify for a loan, mortgage or otherwise.

Whether you are 18 or 65, chartered banks and other lenders determine your eligibility using the following conditions: your income, the state of your credit report, other loans you have taken out, and your credit ratios. indebtedness. There is no difference according to age, or even for the mortgage rate offered.

Ability to pay

The most important thing is that you are able to make your mortgage payments, for example for the next 60 months if you take a five-year term, and beyond those five years when you renew your loan. .

And even if you qualify for a mortgage, that doesn’t mean it’s in your best interests to take it out. You could very well be making a financial “bad choice”.

Suppose Luc, who is nearing retirement age, wants to take out a mortgage on a new condo in Montreal, but his new loan prevents him from fulfilling his dream of spending his winters in Florida. Even though his new mortgage undermines the financing of his plan to spend his winters in the South, what matters to the bank is that he remains solvent in order to make his payments. Luke therefore remains free to make his choices, whether good or bad, as long as he has the capacity to pay.

Less retirement income

Typically, when they retire, most people have a little less income than when they were in the workforce. This is normal, since retirees must subsist on income other than their late salary, such as the Quebec Pension Plan, their investment income, their employer’s pension plan (if they have one). , etc. Generally, the sum of this income is less than the salary during working life.

If you want to buy a Florida condo or a peaceful cottage to enjoy life, your age doesn’t matter. You can be fit and enjoy life at all ages, right? As the saying goes, “age is just a number! “

It will be the same for the financing of your project: it is only a question of numbers. The only rule, whether you’re 18 or 65, is to be able to free up cash to pay off your financing.

Ghislain Larochelle is a professional registered with the Ordre des ingénieurs du Québec Québec as well as the OACIQ.

Advice

  • The ideal is to apply for a mortgage when you still have a salary.
  • Buying as a couple can be a viable solution to reducing the debt generated by a new mortgage. For example, you can share the mortgage on a condo or cottage with a friend.
  • The best way to make good (and big) financial decisions is to consult a financial planner.
www.journaldequebec.com

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