Retirees and pensioners are a group of people who often need money very much. Expensive medications, treatments, rehabilitation, low retirement or disability pensions.
There are many reasons why older people usually reach for loans – most often they are unable to support themselves or have to face illness that requires expensive treatment.
Therefore, banks often receive applications for loans for retirees and pensioners. If you have such a person in the family or you are yourself, read our article and learn more about loans for pensioners.
Problem with long-term loan for pensioners
Older people are ideal borrowers for the bank. Normalized financial situation, creditworthiness, responsibility for regular repayment of installments. No wonder then that they are taken with open arms. However, one should not forget that the loan period can be very long and it turns out that the loan has to be repaid for years.
Problems begin to appear here, because older and sick people cannot guarantee longevity. In the first place, therefore, the possibility of receiving a long-term mortgage falls out. A mortgage for a pensioner is basically impossible to obtain. Access to other long-term loans is often limited.
After the borrower reaches the age of 70, banks begin to have doubts about the loan. They are often in need, but loans for pensioners over 70 are reluctant and rare. Some institutions decide on financial support for such people, but different conditions are imposed on them.
Mortgage loan for retirees
When it comes to a mortgage for the elderly, a reverse mortgage may be the solution. You can read more about this in the article “Reverse mortgage – a chance for older borrowers” .
Solution: junior co-borrower and life insurance
When an older person wants to take out a loan, usually at the very beginning of the conversation with an advisor, many questions also include those about a younger co-borrower. If a pensioner is able to convince someone, preferably a family member (child, grandson) to sign a joint loan agreement, his chance of getting a loan will increase significantly.
In addition, it is a good idea for the senior borrower to purchase adequate life insurance. The chance of a loan for a pensioner increases significantly if he or she has adequate insurance. In the event of his death, the loan is repaid by the insurance company, provided that it was included in the insurance contract.
Special loan conditions for retirees and pensioners
A bank that wants to grant a loan to an elderly person and at the same time has to be careful in this situation often simply sets individual conditions. Loans for retirees usually have shorter loan periods or lower loan amounts. This is usually for the benefit of both parties, because the bank has better security, and the borrower will not risk debt, because even with a small retirement he will be able to pay low installments.
Banks also have many facilities for their older clients. Loans for pensioners are granted on special terms. Most often, banks can offer them a lower interest rate and commission. Loans for pensioners are also characterized by definitely simplified bureaucracy. The banks invite them with an ID card, a second document confirming their identity and a certificate of benefits awarded.
Pensioners can apply for a loan at bank branches, but also by post and telephone, so in theory such a person does not even have to leave the house. If a pensioner takes a loan from the same bank in which he has an account, there is no need to provide an income certificate, because the bank can check the inflows to the account itself and grant a loan based on them. The consent of the spouse is not always required.