Why Retired Homeowners Are Often Richer Than They Realize
Are you a retired homeowner? Studies show that more than a third of Canadians have no retirement savings and that a quarter of retirees still carry debt. Couple that with the stringent lending rules enforced by most banks, and it’s no wonder so many retired homeowners have financial concerns.
Getting a mortgage loan or line of credit from an institutional lender can be trying at best. And with the stricter qualifying criteria now imposed on all borrowing solutions secured by real estate, there are more hoops to jump through than ever. The mortgage stress test can be difficult to pass on a pension, so accessing home equity with a loan from the banks can be frustrating.
Financing Options for Retirees
There are a number of financing options available to older Canadians. But if you’re retired with a limited income, or your income is predominantly sourced from a public or private pension, you may find it difficult, expensive, or both to get financial help when you need it.
Banks, for example, will consider both your income and your credit history when deciding whether or not to approve your loan request. So even if they deem your pension income sufficient to support the new payments you’ll be taking on, without a solid record of debt management your loan application may still be denied.
If you need a loan, your credit score is questionable, and you’re planning to use your pension or OAS benefits as your only source of income, here’s the good news/bad news scenario of what you can expect:
The good news: You can get approved on just your monthly pension or investment income, rather than your credit score.
The bad news: Interest rates may be as high as 50%.
Small Personal Loans
The good news: Interest rates can be more reasonable than online loans, and 5-year terms are available.
The bad news: Approval is difficult if you have high debt or a low income or credit score.
The good news: They’re usually quick and easy to get when you need $1500 or less.
The bad news: Interest rates are high, loans must be repaid within 2 weeks, and non-payment fees and consequences are stiff.
Lines of Credit
The good news: Interest rates for a home equity line of credit (HELOC) are often just 0.5% above prime.
The bad news: Retired homeowners can struggle to get approved based on income, debt, and credit score.
The Best News
If you believe the banks won’t be able to help you because you’re retired with a limited income, then you’ll be delighted to know we’ve saved the very best news for last: Alpine Credits makes it easy to capitalize on your property’s equity to get the financing you need.
As Canada’s home equity lender since 1969, we’ve helped many retired individuals and pensioners access the money in their homes to fund their retirement dreams and expenses, or to help family members with a mortgage or post secondary loan.
Our lending parameters are the same for retired homeowners as they are for those working full-time: your home equity loan approval is driven by the amount of equity you hold in your home – not by your age, income, or credit history.