Credit for senior: how to get a retirement loan.
It is not because you have just celebrated your 65th birthday, that you are one of the seniors, that you benefit from the status of retired that you can no longer conceive of projects. But how do you get there, when life savings are not enough and banks don’t seem to want to extend credit to seniors and pensioners? Think again: after 65, you can still claim a senior loan in Belgium.
What You Should Know About Senior Credit
Certainly, being over 65 and applying for a loan may seem like a risky profile. The amounts of pensions are less substantial than those of the income of professionally active or salaried persons. Second, we may think that there is less risk in extending credit to an elderly person than to someone approaching their end of life.
However, from a legal point of view, there is no maximum age to be able to claim a loan in Belgium, whether it is a personal loan or a mortgage etc.
On the one hand, as a retiree, your life appears much more stable: your income is fixed and you no longer risk being subject to unemployment. With advances in medicine and health care, life expectancy has increased. In the end, if before, it was difficult to grant a loan to a person over 65 years old, currently, credit organizations include seniors in their operating policy.
On the other hand, to define a person’s eligibility for credit, banks and financial institutions take into account two principles: the acceptance rule and the scores.
- The acceptance rule is based on the person’s debt ratio, making it possible to assess the risk of non-payment. A credit should not exceed one third of income, whether you are senior and pensioner or not, you will be refused your loan request if you are already in debt for more than 40%. So, it is not because you are retired that your application for senior credit will necessarily be rejected.
- Regarding the scores, banks and financial organizations fix points according to certain criteria such as the job performed by the applicant, his family situation, etc. The scores take into account the answers given to the pensioner credit request questionnaire and will define the latter’s interest rate.
In the end, if age is involved in the decision to grant or not to grant a loan, financial organizations are not based on this single selection criterion.
At the same time, your interest rate will not be fixed solely on your age. It is very rare for him to be granted higher as his applicant approaches 65 years of age.
The different pensioner loans you can consider
It should be noted that there is no “senior credit” proper. Any person, whether salaried, unemployed or retired can claim a loan in Belgium, on the sole condition that its repayment ends before the 90 years of the borrower. You can thus consider several types of credit for retirees. It will depend on the purposes for which you intend it once it is granted to you.
Personal loan: as mentioned above, there is no age limit for consumer credit. Then, for banks, the amounts to borrow are less important and therefore easily repayable. Therefore, you can request a personal loan to finance your projects of all kinds such as a trip or vacation, without waiting to be able to save.
Note that you will also be able to claim consumer credits earmarked like a car loan to finance the purchase of a new car or a work loan for, as the name suggests, finance works.
However, you need to know at what rate your consumer credit will come back to you. This rate depends on the amount borrowed, the expected repayment period and the guarantees accompanying the request. To find the rate suited to your financial situation, go to my loan comparator to simulate your credit. Select the three or four best offers without forgetting to save the simulations by a screenshot. From then on, you will be able to request a credit for the elderly, personalized without obligation of commitment with the banking establishments offering the lowest rates.
You can obviously ask for additional information, or even negotiate your interest rate with your creditor. If you decide to stay in talks with your regular banker, you can compete.
Mortgage loan: this is a loan, the guarantee of which is the mortgage of a property (it can be a principal residence as well as a rental property). The ceiling of the loan can be higher than that of a consumer credit, you have more interest to consider it for larger projects than those accessible to a personal loan. For example, you may want to consider this if you wish to acquire a second home.
Mortgage life loan: it is always a question of mortgaging a property, but unlike a mortgage, the borrower enjoys his property until his death, regardless of his state of health. If you are considering a mortgage life loan, you will not repay anything to the bank or financial institution of your choice. It is only on your death that they will use your property to be reimbursed. As a senior, you can consider it if you wish, for example, to benefit from a home assistance service, integrate a retirement home, pay certain medical expenses, etc.
However, you need to know a few things. Unlike a mortgage, a life mortgage should not be intended for a professional project. The property must be used only for housing. The owner applying for a mortgage life loan must not have taken out death insurance and the credit will only be granted to a natural person (and not to an association or a legal person).
The final word
In Belgium, as elsewhere, banks have the legal right to refuse a credit request according to their own criteria for assessing the risk of non-repayment. However, your chances of obtaining senior credit are not necessarily lower because you are a pensioner. Visit banks and financial institutions or better, ask a credit broker. The latter will help you in your search, so that you can find an institution willing to collaborate with you and able to offer you the most advantageous agios for your financial situation.