Buying a house at an older age

As you get older, your housing needs change. Maybe you want to live smaller, be closer to family, or have a house with less maintenance. In this article, we will discuss everything involved in buying a house at an older age. From taking out a mortgage after retirement to involving the right professionals. We give useful tips and look at alternative options for a future-proof home, such as renting or renovating your current home.

What is wiser at an older age: buying or renting?

Whether it’s better to buy or rent at an older age depends on your personal situation. If you expect that you can live in the new home for a long time, then buying can be attractive. In that case, you only have to make the additional costs of buying a house once. In addition, your home can increase in value, which is financially advantageous. Both for yourself and for your heirs.

A purchase house can be completely adapted to your wishes and with an eye to the future. For example, you can make the bedrooms and bathroom downstairs, make everything ground-floor and install a stair lift. On the other hand, buying brings maintenance obligations. The older you get, the more difficult it can be to do the maintenance yourself or to arrange these matters.

In addition, you have to take into account a possible future sale of the house, for example if you move to a nursing home or if you pass away. Are there people in your family who can help you with the sale, if you can no longer do this yourself? Some people choose to rent at an older age because they do not want or can burden their family with the maintenance and possible sale of a house.

Renting also offers more flexibility and less worries. You have no maintenance costs, and your financial situation is clear without complicated taxes and insurance. It can be more difficult to adapt a rental property in a pleasant way, as you need permission from the landlord. In addition, you may have to deal with annual rent increases and you do not benefit from value increases.

Buy, rent or renovate?

If you already own a home, it is also an option to make it future-proof by means of a renovation. Consider installing a bathroom on the ground floor or making your home ground-level. In this way, you can continue living in your familiar neighborhood, with your own network and known amenities nearby. 

Tip: If you are considering increasing your mortgage for a renovation, it is wise to do this before you reach the age of 57. From that age, your pension income is included, which often means you can borrow less.

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Can you buy a house at an older age?

Yes, it is certainly possible to buy a house at an older age. However, keep in mind that from a certain age your retirement age is taken into account when calculating your maximum mortgage. It is also wise to think about the duration of the mortgage. Some elderly people opt for a shorter period, so that survivors are not left with a (large) mortgage debt.

There are different other ways to finance the house (partly). If you already own a home, you can use the surplus value for (part of) the financing of a new house. In addition, you can also use retirement provisions and savings or investment assets as (additional) financing for the house. 

Can you get a mortgage at an older age?

Even at an older age it is quite possible to take out a mortgage. There is no maximum age. In principle, you could still take out a mortgage with a 30-year term at the age of 80. As your income changes as you get older, your maximum mortgage will be calculated differently at some point.

From 10 years before you retire, and in any case from the age of 57 (10 years before the AOW age), mortgage lenders include your pension income in determining your maximum mortgage. As your pension income is often lower than your current income, this usually means you can borrow less. Sometimes it is also possible to repay part of the mortgage faster, before you retire.

By calculating with your pension income, both you and the bank are sure that you can bear the mortgage costs for the next 30 years. Besides your pension income, it is also looked at what monthly costs you can actually pay. If this turns out to be higher, you may still be able to get a higher mortgage. 

Take future plans into account when calculating your maximum monthly charges

Do you know what you can borrow at most? Don't just focus on this amount. It's not just about what you can afford in monthly charges, but also about what you want to pay. How do you want to spend your old age? Do you want to travel a lot, do you want to work less in the coming years, is there a large expenditure planned? Map out what your future plans are and what monthly charges you want to bear at most. Even if you want to sell your house again at an older age, it's important to include this in the plans.

Is it necessary to take out a life insurance policy?

Some mortgage lenders require you to take out a life insurance policy (ORV) if you want to take out a mortgage that is higher than 80% of the property value. The older you get, the more difficult it can be to take out this insurance. Especially if you suffer from certain complaints or have been sick before. The premium is also often much higher.

Fortunately, many mortgage lenders no longer require a ORV. If your mortgage lender does ask for a ORV, you can avoid this obligation by bringing in sufficient own funds (+20% of the property value). 

How long is the term of a mortgage in old age?

The term of a mortgage is not dependent on your age. The standard term of a mortgage is 30 years, but you can also agree on a shorter or longer term. Older people sometimes choose to shorten the term, so that they do not leave beneficiaries with a mortgage debt after death. 

What happens if you die during the term of the mortgage?

If you die during the term of the mortgage, your survivors inherit both the house and the mortgage debt on it. This means that the mortgage debt does not automatically disappear upon death. Your survivors become responsible for its repayment. The specific consequences of this depend on the financial situation and the agreements made.

1. If survivors inherit a house, they can choose to sell the house, keep it or rent it out. If the house is worth more than the mortgage debt, the house can represent a positive asset for the heirs (and vice versa). 
2. If the deceased has taken out a ORV, this insurance can help to fully or partially repay the mortgage debt on death. This eases the financial burden for the survivors and makes it less likely that they will be forced to sell the house.
3. If survivors are unable to bear the mortgage costs, this can lead to financial difficulties. In the worst case, the house can be forced to be sold to repay the debt.

Note! As a survivor, it is important to understand what it means to accept or reject an inheritance. In our article about inheriting a house we explain what the rules are. Also always talk to an expert, such as a notary or a legal advisor, for appropriate advice, before making a decision. Also read about selling your parents' house after death.

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Tips for buying a house at an older age

Below you will find 10 tips for buying a house at a later age.

Tip 1: Start a conversation with your children/family

Are you thinking about buying? Discuss it with your family. In the future, they may start to support you more, for example with maintenance and administrative matters. It's good to hear how they view the purchase of a property. Moreover, it can be useful to hear their ideas about the location, for example because of the travel distance, and about the type of house, for example whether it is future-proof or not.

Tip 2: Invest your own money to avoid a mandatory ORV

Some mortgage providers require you to take out a life insurance policy if you want to borrow more than 80% of the property value. If you have health problems or are at an older age, it can be difficult to take out an ORV. In addition, the premium can become very expensive.

If possible, it is wise to contribute sufficient personal funds so that you fall below the 80% mark. You then do not need to take out insurance, and can often also get a lower mortgage interest rate.

Tip 3: Think carefully about the length of your fixed interest period

If you are at an older age, it is useful to know what the upcoming period entails. Your (pension) income is not going to change (much) anymore. A longer fixed interest period provides certainty about your monthly costs. Of course, there are exceptions. Therefore, always discuss your situation with a mortgage advisor.

Tip 4: Use the surplus value of your house for the purchase of your new house

By using the surplus value for the purchase of a new house, you need a lower mortgage. Moreover, the interest rate is lower. This way you have more money left over to live on and to do fun things. In addition, you may only (under conditions) deduct the interest on your new mortgage from income tax if you have put the surplus value in your new house.

If you do not use (a part of) the surplus value for the financing of your new purchase, then that part of the interest is not deductible for income tax. The government encourages you to keep your mortgage debt as small as possible in this way.

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Bridging mortgage

Tip 5: Use a bridging mortgage to utilize the surplus value of your old home before it is sold

If you are selling a property with surplus value, this can help finance your new home. A bridging mortgage can be used to utilize the surplus value before your current property is sold. Always seek information and advice from a mortgage advisor in this regard.

Tip 6: Investigate whether you can take your old mortgage with you

By taking your old mortgage with you to your new home, you can benefit from the interest rates and conditions that you established in the past. These are often more favorable than the current market interest rate. Moreover, you can often borrow less in later life, as mortgage lenders take your pension income into account in the calculation. Read more about taking your mortgage with you. 

Tip 7: Choose a future-proof home

There are several things you need to (extra) consider when buying a home later in life. First and foremost, it is essential that the home is easily accessible, preferably on one level. If you plan to downsize, such as from a detached house to an apartment, check if there is a lift.

The environment also plays a big role: make sure there are enough shops nearby for daily groceries and other necessities, and pay attention to the proximity of public transport and healthcare. Preferably choose a home that requires little maintenance, as this can be taxing in older age. 

If socializing in the neighborhood is important to you, also look at the social activities and the degree of involvement of the local residents. A good purchase real estate agent can definitely tell you about this. This way you can spend your old age in a pleasant environment.

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Tip 8: Consider a home near your children or other acquaintances

Consider moving closer to your children or other acquaintances. Maybe in the future you will be less mobile. It is then nice to have your network in the neighborhood. Also pay attention to the opportunities you have for public transportation. This way you can be sure that you can visit people, even if you can no longer drive a car in the future. 

Tip 9: Plan a free introductory meeting with a mortgage advisor

Do you need a mortgage to finance your new home? Get good advice from a mortgage advisor who has experience with seniors and their specific needs. With most mortgage advisors you can request a free mortgage conversation in which you learn a lot about the possibilities. 

If you register with us to find a purchase Real estate agent, you can also request a free mortgage conversation. Make sure to use this advantage!

Tip 10: Engage a Real estate agent who has experience with seniors 

Engage a Real estate agent and mortgage advisor who is familiar with the particularities that come with buying a home at an older age. Register with us for free to quickly discover the best Real estate agents in the area. Mention in your request that you are looking for an expert who has experience with seniors, and get in touch with suitable Real estate agents.

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