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Being an existing homeowner may help your situation
Even if you have strong income as a pensioner, a number of factors such as illness or hospitalisation may affect that income and lead to financial difficulty. If you are a homeowner, you may be able to access any funds or equity in your property to secure
loan and convince lender that you can meet proposed repayments for term of loan.
Non-standard loan facilities may be difficult to obtain
Line of credit mortgages, some long-term fixed-rate mortgages and mortgages that offer payment breaks are all innovations that have appeared in mortgage market in recent years. Unfortunately, many of these mortgages may be unavailable to pensioners. Lines of credit, for example, which allow homeowner to take equity out of his or her home, present greater risk to a money lender because of their potential to extend loan period and create more opportunity for default. Because pensioners may already be considered high risk, it is unlikely that these financial products will be available.
You may be required to apply for loan insurance
Depending on your circumstances, you may wish to obtain loan insurance. This ensures that your loan repayments are met in event of involuntary unemployment, injury or death. Although premium may be higher than average due to your status as a pensioner, a lender may nevertheless require you to obtain loan insurance before approving your application.
Nick Cameron is a writer for Australian Debt Reduction which is part of Australia's largest Debt Relief organisation and has assisted more than 10,000 Australian's reduce their debt. You can read more articles and find out more about how to reduce your own debt at http://www.australian-debt-reduction.com.au or by calling 1300 306 272 from within Australia.
