Until what age can I request a mortgage?
Age is a very important factor when applying for a mortgage and, combined with other elements, establishes the risk level of this operation
There is no law in Spain that establishes the age limit to apply for a mortgage, but it is each bank that sets this limit according to its risk policy. When requesting a mortgage loan, age is important since it directly influences the borrowing capacity, the repayment period, the economic solvency of the holder and the risk of non-payment.
Although it is not mandatory, the Bank of Spain recommends that the mortgage amortization period not exceed 30 years and that the payment of the last installment be made before the holder reaches 75 years of age. In other words, it advises as a general rule not to apply for a 30-year mortgage after reaching 45 years.
What is the best age to apply for a mortgage?
Each stage in a person’s life has a series of needs and has a different economic situation. These differences must be considered when requesting a mortgage as they affect the financial solvency of the buyer, their level of savings and the maximum repayment term, factors that the bank analyzes to grant a mortgage loan.
The economic solvency of the buyer is one of the main aspects to take into account when contracting a mortgage. At this point the borrowing capacity comes into play. Experts recommend not allocating more than 30% of the monthly income to pay the mortgage. Usually, the older the home buyer is, the higher the economic income derived from work is, which means that they have a greater borrowing capacity.
But, in addition, another aspect to keep in mind to analyze economic solvency is job stability, through the employment contract and working life. A person usually has greater stability between the ages of 35 and 45, which favors contracting a mortgage.
THE LEVEL OF SAVINGS
Banks offer financing, at most, for up to 80% of the total appraisal value of the property. Therefore, the future owner must have saved the remaining 20% together with the expenses associated with the purchase of the home (notary, appraisal, taxes,…), which represent between 10% and 15%. It is usual that, as a person gets older, his savings level increases, which will allow him to reduce the amount of the mortgage that he needs to contract to acquire the house that he wants to buy.
THE AMORTIZATION TERM
The maximum recommended period to complete the repayment of a mortgage is 30 years. Therefore, with increasing age, the number of years to satisfy a mortgage loan decreases. This means that, even if mortgage financing is granted to a person, for example, at 50 years of age, the repayment term will be a maximum of 25 years. This means that the monthly installments are higher than in the case of a younger buyer, who can extend the repayment period up to the recommended maximum of 30 years. However, as it is usual that the older you have more savings, it will be possible to face higher installments.
Therefore, younger buyers, although they tend to have a less stable employment situation and have fewer savings, have the possibility of contracting a mortgage with a longer repayment term and have lower monthly payments.
On the contrary, as time passes, although the employment situation usually stabilizes and the level of savings grows, the repayment term available to the buyer is reduced and, therefore, the monthly installments that must be paid for the loan are higher. In any case, to understand all the key factors when taking out a mortgage, it is essential to have the advice of an expert such as that of the bank, which guides the future owner throughout this process and resolves any questions that may arise. .
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