The retirement period is an opportunity to satisfy many personal or family projects (moving, travel abroad, housing work, rental investment, etc.). But it’s all about money.
With the decline in income, are the personal or real estate projects of retirees still financable through credit solutions? Is there an age limit for consumer credit? Is it possible to borrow after 75 years? Is the mortgage loan insurance rate based on age exploding? So many questions about the credit for retirees who tease you. Rest assured, we tell you everything.
Credit for retirees: for which projects?
16.1 million is the number of retirees in France identified by the Research, Studies, Evaluation and Statistics Department of the Ministry of Health (DRESS) who received a pension at the end of the year 2016. Adding up those receiving a survivor’s pension, this figure climbs to 17.2 million.
The 60 and over age group should form a quota of 20 million people by 2030 because of demographic aging but also the increase in life expectancy (better lifestyle, technical and technological developments in disease detection, risk prevention campaigns, particularly in the workplace, etc.).
In terms of resources and after social security contributions, the average pension amounted to $ 1,294 / month, with a certain difference between women ($ 1,070 gross / month) and men ($ 1,740 gross / month). The fall in income at the time of retirement is estimated between 15% and 40%.
However, a retiree is a consumer like any other, who also tends to spend more (travel, leisure, development work, rental investment, intergenerational assistance, etc.). This is called the silver economy (or economy of seniors), a branch of activity which brings together all providers of services and products intended for the elderly in health, transport, security or even habitat.
The tax credit for non-taxable retirees
Are you retired and not taxable? Then the tax credit is a solution available to you. All home service activities such as meal preparation, laundromat activities, assistance, transport, cleaning, gardening or DIY are concerned.
This wide variety of activities on offer allows retirees to benefit from a reduction of 50% of the sums committed in this context. At most, the expenses giving entitlement to this allowance are capped at $ 12,000 for a single person and $ 20,000 for a couple.
Personal loan for retirees: a relevant financing solution
Admittedly, retirees’ incomes are sometimes too limited, but they can count on credit solutions to finance their trip abroad, the replacement of a vehicle or the performance of interior fittings in their house or apartment. They can take out consumer credit quite easily because their borrower profile is considered reliable by banks and lenders for at least three reasons:
- their retirement constitutes stable income, the specter of unemployment being eliminated;
- 80% of seniors own their homes, some having even completed the reimbursement of their monthly payments;
- retirees have a high debt capacity.
Not only does consumer credit ignore age, but it can be obtained on advantageous conditions for the reasons mentioned above. To take out consumer credit, insurance is optional and the obligation to fill out a health questionnaire only applies when taking out death and disability insurance. The repayment monthly payments are low, therefore with a less impact on the purchasing power. Finally, seniors with assets can guarantee their loan on it.
Good to know : the personal loan is not affected unlike for example a car loan. It requires no proof, the use of the borrowed amount being left free.
The repurchase of credit for retirees: finding room for maneuver
The credit consolidation solution is a remedy for retirees who wish to finance a new project while they continue to repay one or more other credits. The process is simply to combine several bank loans to make one. The idea is to clarify the situation on current loans but above all to negotiate with the lending institution more favorable conditions at the same time as the transition to retirement is synonymous with loss of income.
For a retiree, combining his credits allows you to review the repayment period as well as the level of monthly payments. The objective is to extend the term of the loan to take advantage of a drop in the amount of the single monthly payment, while financing a new project. Its expenses of repayment of the credits reduced, the senior is able to compensate for the fall in his income.
The loan repurchase can group the current real estate loans or the consumer loans. Certain lending organizations precisely formulate senior loans (or for early retirees). These contracts may propose repayment periods for the repurchase of credits of up to 85 or even 95 years. Everything then depends on the repayment capacity and the debt capacity of the retiree.
If the banks can request the subscription of a death-disability insurance beyond a certain age to cover themselves, the senior has the right to refuse including if it presents an aggravated health risk as framed the convention AREAS (Insuring and borrowing with a health risk). However, the retired borrower will have to post serious guarantees in the event of impossibility of meeting its maturities by means of its inheritance or its savings (life insurance contract for example).
Mortgage for retirees: anticipate retirement
In theory, there is no age limit for taking out a mortgage. However, many people borrow some time before retiring. The over 50s were thus only 11% in 2013 to validate this choice, a figure which now climbs to 17%. But the transition to retirement acts as a switch since only 4% of seniors over 60 have taken out a mortgage.
It is obvious that senior citizens represent a higher risk for lending organizations, which rely on people who can repay the loan. Banks therefore play the security and the ability of the retiree to repay his loan, rather than the nature of the real estate project. As a result, the bank does indeed take a kind look at customers who are retiring. They generally have stable assets and income, and no longer have dependent children.
The lender even anticipates the decline in retirement income, either by taking into account only 70% of income when assessing the debt capacity and quantifying its offer, or by reducing the amount of monthly payments. repayment in time. Example: monthly payments can be reduced from 30% to 90% at the time of the subscriber’s retirement in order to take into account the loss of income.
Mortgage without contribution for senior: is it possible?
Obtaining a mortgage without contribution is an option open to retirees. Indeed, certain life events (personal project, help for children or grandchildren, etc.) can lead to depriving oneself of its contribution.
However, it is still possible to obtain a mortgage without contribution for seniors although this approach is more complex. To optimize your file, you must strictly comply with bank debt standards and the age at which credit ends. Soliciting several financial institutions is also essential.
Senior real estate loan: managing death and disability insurance well
When the contribution or income is significant, a retiree can perfectly consider making a mortgage at the age of 60 or even 70 years. However, the lending institution imposes more stringent conditions and sets a high cost for death and disability insurance. Advancing age is correlated with the appearance of pathologies or the accumulation of medical history. The bank protects itself by increasing the rates on the borrower insurance which takes over in the event of the death of the subscriber.
Taking out a mortgage up to age 65 is no problem. Lending institutions formulate negotiated group insurance offers which allow them to pool risks between members. On the other hand, from 65 years of age, death-disability insurance is a concern, its coverage not extending beyond 75 or 80 years. Thus, making a mortgage at 65 years over a period of 15 years becomes complicated. Using insurance delegation allows retirees to take out a specific senior contract with coverage up to 80 years or even 90 years.
Please note, the cost of borrower insurance can cause the rate of wear to exceed, which means that the client cannot be financed, especially in the event of illness which causes a significant increase in the premium. Financing without insurance then appears to be the solution. The retiree can guarantee his loan by a third party who will act as a surety or by pledging the loan on a life insurance contract or on a stock market portfolio.
In the event of death, the bank becomes the beneficiary, the latter may also take out a mortgage on the property owned by the deceased retiree. It can also insure only the younger or healthy spouse.
Auto credit for retirees: under what conditions?
Obtaining a car loan when you are retired requires following granting conditions similar to those of a personal loan or a mortgage. Thus, it is essential to minimize the duration of borrowing while respecting a debt ratio of 33% maximum.
Good to know: some banking establishments accept to lend without insurance in return for the pledge of an investment or the taking of a pledge on the vehicle.
What are the credit organizations for retirees?
Seniors can refer to all traditional financial institutions such as banks and bancassurance. It is also possible to request the services of a specialized broker in order to simplify the process undertaken and obtain the best rate conditions.