There are several factors that influence when the bank grants a mortgage and one of them is the age of the applicant. Although legally there is no specific limitation, banks usually establish 75 years as the age limit to amortize the payment of a mortgage, although there are exceptions. We review the keys to keep in mind:
What is the maximum age to apply for a mortgage?
Legally, there is no specific limitation that establishes a maximum age to request a mortgage. However, in general, 75 years is established as the age limit to amortize the payment of a mortgage. Taking into account that the shortest mortgages have a duration of 10 years, this means that the maximum age to apply for a mortgage is 65 years.
Why is the maximum age to request a mortgage 65 years?
When the bank lends us money, it does so hoping to recover it and obtain a profit with said loan in the form of interest. However, in the case of clients over 75 years of age, are considered to be higher risk customers. That is to say, clients who can generate defaults in the repayment of the loan, for which the banks do not consider it a safe operation to grant a mortgage that implies that the client will continue to owe money to the bank with more than 75 years.
Why? Because it is considered that from this age there is increased risk of death and, consequently, risk of non-payment.
On the other hand, it must also be taken into account that, at 75 years of age or older, the majority of people in this age group depend on the pension as their sole or main source of incomewhich increases the risk of non-payment by not being able to access a source of income such as a job.
Why is age taken into account when applying for a mortgage?
There are several factors that banks take into account when granting mortgages. Among all of them, age is one of them because, depending on the stage of life in which we find ourselves, certain conditions are assumed that facilitate or not the repayment of a loan.
For example, in the case of younger people, it is usually assumed that they have more difficulties when it comes to facing high installments, but they have an easier time facing longer mortgage repayment periods. These aspects are what, for example, are taken into account when offering products designed specifically for this customer profile. For example, mortgages for young people.
On the contrary, people over 40 years of age tend to have a more stable employment situation. This means that they can face higher installments, but shorter repayment periods.
What other guarantees do banks ask for?
However, it must be borne in mind that age is not the only element that banks will take into account when granting or not granting a mortgage. In this way, the study carried out by the entity before approving the mortgage is very broad, and covers all aspects related to the applicant’s profile.
Among the elements that have more weight when granting a mortgage, the following should be highlighted:
- Employment and economic situation of the applicant: A fixed contract and stable income are one of the main elements that banks take into account when granting a mortgage.
- Loan repayment terms: The repayment terms also determine the granting of the mortgage. In this sense, it is more complicated for banks to approve mortgages with repayment terms of more than 30 years.
- borrowing capacity: If the applicant has other loans or debts to deal with, this will make it difficult to grant the mortgage.
- Heritage and guarantees: If the applicant has assets (for example second homes) or people who guarantee the loan, it will be easier to obtain the mortgage.
- credit history: In the event that the applicant appears or has appeared on a list of defaulters, it will be difficult for the bank to approve the operation.
- Savings and mortgage size: If the applicant has previous savings, the amount of money that will be requested from the bank will be less, so it is more likely that the entity will approve the operation. In this way, requesting a mortgage without savings will be more complicated.
Are there mortgages with repayment terms up to 80 years?
There are some mortgages that can have repayment terms that go beyond 75 years. Specific, up to 80 years. However, it must be borne in mind that these are credit repayment or repayment terms.
This does not mean that the maximum age for requesting a mortgage in these cases is beyond 75, but rather that, in these specific cases, return times may exceed this established limit. For example, in the case of mortgages that have been granted at ages around 60 or 65 and that, in some specific cases, can extend the repayment terms up to 80 years.