Asking for a mortgage can be a big problem for certain profiles, such as the elderly. Despite there being no regulation regarding the maximum age at which a loan can be requested, banks can establish a limit on their parameters. For those who plan to take out a mortgage, it is important to be aware of how many years after they are not granted, as well as what other reasons may be an impediment.
Ricard Garriga, CEO of the digital mortgage advisory platform Trioteca, affirms that the most common limit of the entities is that the sum of the age of the applicant and the term of the mortgage is 70 years. In the case of a couple, the age of the oldest is taken. For example, a 40-year-old applicant could apply for a 30-year mortgage, whereas a 50-year-old would not. There are exceptions, since there are banks that extend it to 75 years and others in which the age for calculation is that of the youngest of the applicants.
According to Garriga, the productive age of people ranges from 25 to 70 years and the average age of people who take out a mortgage is between 35 and 45 years. He defends that the life of the mortgage be condensed in the most economically productive period of the people, since otherwise “it would be financial recklessness.”
Ricardo Gulias, the CEO of the financial intermediation company RN Tu Solución Hipotecaria, explains that banks calculate debt based on interest rate and term, and it is this variable that determines whether or not the bank grants a mortgage. At an older age, if terms are shortened, the fee becomes higher.
In RN they warn that those who have the most problems getting a mortgage are people over 60 years of age, the self-employed who have a low income, people with little contribution and those who do not have a certain job stability. They also warn that there are entities that do not accept that the owner is under 20 years of age due to lack of life experience, although if young people have savings, job stability and good debt, they usually do not have problems being granted it.
From the financial intermediary they assure that the ideal profile is one that has saved own funds that allow them to go to a maximum of 90% financing, with job stability, an indefinite contract of seniority greater than two years and with a debt that does not exceed 35 % in the payment of the fee on their income. Characteristics that are more difficult to achieve in this age of more expensive mortgages. More specifically, one of the preferred profiles for banks is that of civil servants with savings.
Despite the rise in rates and tougher conditions, Gulias affirms that banks continue to want to give loans, so a client who meets the necessary requirements can receive a mortgage with up to 100% financed. “The banks know that the profiles that qualify as good today will have good payment behavior, since we are in a scenario of high rates, which can only go down in the medium term and will only be able to go loose in the future.”
From Trioteca they remember that another piece of information that entities take into account when deciding whether to grant a mortgage is the effort rate, which is the percentage of the money that goes into a house that goes to the mortgage, which must be 35 % max.
With this in mind, in case of having a variable mortgage, one of the main problems is the rise in Euribor. A year ago the Euribor was at 0.992%, therefore, in case of having a variable mortgage of 200,000 euros with Euribor 0.99% at 30 years, you had to pay about 732 euros, which forced the minimum income were 2,091 euros. Now it is 4.149%, so with the same mortgage you have to pay 1,091 euros per month, so you must enter 3,117 euros to meet 35%.
