More and more people are thinking about renovating their home for energy efficiency and installing a heat pump or a solar roof, for example. But for this it needs money, many is the financing only with a loan from the bank possible. However, people aged 60 or 70 and older – the generation that often owns its own property – will not be able to get one easily. "The older you get, the more difficult it is to get a loan," says roland stecher, an expert on real estate financing at the bremen consumer advice center.
Although there is theoretically no maximum age when granting real estate loans. However, the EU home loan directive, which was introduced in 2016, states that banks should ensure that borrowers can settle their debts during their lifetime. That is why banks not only take into account the current income and asset situation when examining the loan application, but also how the income is likely to turn out in the future. In the meantime the law was improved indeed somewhat, so also the value of the real estate is considered with the examination of the creditworthiness more strongly. Nevertheless, the guideline tends to be disadvantageous for people in or even approaching retirement age.
Age does not play a role in interest rates
On the other hand, creditworthiness has a particularly positive effect. "If income and equity are high enough, even the 65-plus generation has a good chance of getting a loan," says kerstin riege, a specialist in construction financing at credit broker dr. Small in berlin. As a general rule, age is irrelevant when it comes to interest rates – given the same general conditions, older borrowers pay the same interest rate as younger ones. "The higher the credit rating and equity, the better the conditions are," says riege. And the 60-plus age group in particular has usually already accumulated more savings and has a higher salary than people just starting out in their careers.
However, she also restricts: not every bank still offers seniors a loan. The financial institutions interpret the residential real estate loan guideline to varying degrees. "That's why it's especially important for older prospective customers not to go to their house bank alone and not to be discouraged by a rejection," says riege. In a comprehensive comparison, it would still be possible to find banks for which only creditworthiness plays a role, not age.
Upcoming retirement has an impact
In response to a query, deutsche bank stated, "there is no general age limit for the granting of real estate loans at deutsche bank."Spokeswoman iris laduch says: "each credit granting precedes a careful creditworthiness examination, whereby most different criteria are consulted." This included, in addition to the current assets, occupation, income and living situation of the applicant, as well as the amount of his total liabilities, the consideration of foreseeable changes, such as retirement.
In a study conducted by stiftung warentest in 2020, DEVK was the only institution surveyed to specify a maximum age for taking out a loan of 65 years old. This is now no longer the case, says spokeswoman miriam petersen: "we do not categorically exclude older borrowers."However, the financing must be reasonable and presentable in relation to the income and asset situation, and also taking into account further life planning. "For example, we would be more likely to finance an age-appropriate conversion of an encumbrance-free existing property than the initial purchase of a property with a loan term of 35 years," says petersen.
Higher repayment rates for older borrowers
What older borrowers should also always expect are higher repayment rates, says consumer advocate stecher. "Ideally, it is a full repayment loan, that is, at the end of the contract no residual debt remains." At a minimum, however, banks generally require older borrowers to pay repayment rates of two to three percent.
In addition, banks often require additional collateral from older customers. On the one hand, this is always the property itself, but the institution may also want to see the pension information for security purposes or require that the term or endowment insurance be assigned to the bank when it matures, stecher explains. Other banks want to know how older borrowers handle succession, or will only grant a loan if a younger person signs the contract in second place.
"Since the conditions differ greatly, it is always worthwhile to obtain several offers, even through a real estate financier," advises the consumer protector. "With the offer of a real estate financier, you can also go back to the house bank and ask if they offer the same conditions. Our experience is that relationship banks usually want to maintain the relationship and make a similar offer."
Consider kfw loan as an option
Other tips to still get construction financing in old age, according to dr. Small: if possible, bring a lot of equity, offer additional collateral, for example in the form of a life insurance policy, which strengthens the credit rating in addition to the equity, agree affordable and flexible installments and unscheduled repayments. Flexible rates, in particular, can be helpful in a transition from working life to retirement when income levels change.
He added that there is also an opportunity to apply for a loan from the state-owned kfw bank. Kfw grants subsidies regardless of age and income. For example, the bank also supports the purchase of barrier-free real estate. Builders must apply for the grant via the kfw portal, the loan itself is then available from a bank.