No home loan by 40? You may never get one

SYDNEYSIDERS who do not get a mortgage by their late 30s face never being able to own their own home due to bank policies that rate them too old to be capable of paying off a standard loan.

SYDNEYSIDERS who do not get a mortgage by their late 30s face never being able to own their own home due to bank policies that rate them too old to be capable of paying off a standard loan.

Bank insiders told The Saturday Telegraph current lending rules mean the average NSW wage of $82,466 a year may not be enough to pay off a standard 30-year home loan for someone in their late 30s or 40s.

“If someone comes in aged in their 40s on an average wage with no assets and no money for a deposit, then yes they could get rejected,” an ­insider at one of the big four banks said.

Banks insist there is no age cut-off point for lending money.

But having a regular income over the life of a 30-year loan is one of the critical factors banks take into consideration before making a decision to lend.

Mortgage Choice’s John Flavell says over-40s need an “exit strategy”.

An applicant’s savings, assets and the amount sought are other critical factors.

A Westpac spokeswoman said when a customer applying for a mortgage indicates they will reach retirement age during the loan term, the bank will ask further questions.

“It is not in our interest or the customer’s interest to issue loans that cannot be repaid,” she said.

Australia’s current retirement age is 65 and will rise to 67 in 2023.

According to data from the Australian Bureau of Statistics and Reserve Bank, the ­average mortgage today is $389,000, and has an interest rate of 5.2 per cent.

This compares to an average of just $99,200 in 1995, with a 9.75 per cent rate.

In February, the median price of a Sydney dwelling hit $880,743.

But more than 49 per cent of houses sold in ­Sydney last year fetched more than $1 million, according to CoreLogic analysis.

It can tougher to get your first home loan as you get older.

A source at one of Australia’s largest banks said only 1 per cent of its newly written home loans were going to people aged 65 and over.

Mortgage Choice chief executive John Flavell said lenders often require older loan applicants to have an “exit strategy” — a plan to pay off the loan before retirement — before granting a mortgage.

Mr Flavell said the exit strategy would normally have to show the client’s ability to either make a bulk reduction to pay off the loan by retirement, or prove the loan will be serviceable beyond their expected retirement age.