RETIREMENT
Bridging
the (age) gap
Property purchasing peeves for 60-somethings
Y
ou would think that upon reaching your golden years
you are of an age to qualify to do pretty much anything
– you’ve worked hard, earned your dues and own your
own home. However, when it comes to buying property,
for 60-somethings things do get a little harder as they find
themselves faced with bank mandates, age restrictions and all
sorts of conditions, and the inevitable hard-to-read fine print.
Unless you have cash in the bank (or under your mattress)
you would be advised to look beyond the bank – many
don’t work in this space and are also reluctant to grant new
20-year mortgages to senior citizens, this despite the fact
that the National Credit Act stipulates that one cannot be
discriminated against when applying for finance on grounds
of race, religion, sex and age. The banks may consider
helping out under certain conditions and will do so at their
discretion but will also be very stringent in assessing your risk
and affordability – there are some instances where they may
consider a loan if your pension is deposited there but typically
this is an arduous route to follow.
It’s rather surprising that financial institutions are not
looking at this mature market which is fast becoming a key
driver of growth in the property sector. A recent report from
FNB’s Estate Agent Survey stated that the group of sellers
selling “to downscale due to life-stage” was by far the largest
single group of home-sellers in the third quarter of 2017.
Charmaine Large, Executive Home Loans consultant
at Evo Group, says what they are seeing is that retired or
nearly retired borrowers may well have low debt, substantial
assets and home equity, but may also be on a fixed income or
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pension and if that income is lower than what they used to
earn this can hamper the approval of a home loan for their
retirement home. She adds that bridging finance has now
become a popular port of call for 60-somethings.
Iza Albutt, Marketing Manager at Bridge Flow, a Cape
Town-based bridging finance company, says that they are
able to accommodate this mature market looking to sell their
family homes to buy in retirement villages with customisable
finance solutions. “Unlike the banks, we don’t look at
affordability based on income, we look to their assets and
ensure that a firm exit strategy is in place, taking the time to
find a way to help and explain every step of the process, and
the incumbent expenses that can arise.”
A typical scenario where bridging finance can be of
assistance is where an individual or couple wish to downscale,
or acquire a property in a retirement home, and have found
exactly what they have been looking for but have as yet not
sold their existing un-bonded home.
The bridging finance company will assist the client/s in
acquiring the home and secure the loan to them by registering
a mortgage bond over the existing property affording them
a six-month period, with the possibility of an extension of
time, in order to sell their existing property and to repay the
bridging company the loan.
It’s important to for retirees to know that other options
do exist so that they can make an informed decision to make
that all-important move, and to feel safe and secure, giving
themselves and their children peace of mind.