In our society it is common to borrow. There are fewer options for people over 65 to take out loans. Banks no longer seem to be interested in this target group. Retirees must start enjoying the pension they have built up. Unfortunately, this does not apply to all retirees. Not every employee builds up a supplementary pension with the employer. In that case, they have to survive on an AOW (50 to 100 percent of the minimum wage). Seniors often experience difficulty accessing financial services to cover temporary shortages. Some insurers have car insurance maximum ages above which they no longer take out insurance. Taking out a mortgage for a new house to be purchased without contributing your own money is also virtually impossible. This also applies to revolving credits and personal loans.
Why are seniors not an interesting target group?
The elderly obviously have a greater risk of death in the short term compared to younger consumers. The bank is faced with the problem of how to get back the money lent in that case. For younger customers, they cover this risk with term life insurance, but such insurance is no longer available for the elderly. This insurance pays out the insured amount in the event of death during the term of the insurance. The premium is based on the chance that the insured person will die during the term of the policy. Most insurers apply a maximum age of 65 to take out such insurance.
Take out an additional mortgage
A solution could be to take out an additional mortgage on the house. This is possible if the homeowner has considerable equity in the house. In that case, the bank can lend the amount without running much risk. The house serves as collateral for the loan. In the event that the consumer dies or major payment arrears arise, the house can be sold in extreme cases. The mortgage interest you have to pay for this is not tax deductible. Banks will also only be willing to provide part of the surplus value as a kind of credit mortgage.
When taking out a loan, the bank takes into account the age of the applicant. Credits that already exist can often still be used after the consumer turns 65. The banks often use a lower age for acceptance of the loan and a higher age by which the loan must be paid off. For example, the acceptance age is up to 65 years and the loan must be paid off when the consumer reaches the age of 75.
There are still options for the elderly to borrow money, but these are the more expensive ways of borrowing. By applying for a credit card, extra money is available at least temporarily. However, this is a method of borrowing that is not recommended. The interest rates are between 10 and 15 percent. This generally concerns small amounts, but the interest plus repayment can be a significant burden on the monthly income.