With retirement approaching, the question inevitably arises as to where we will spend the years following the cessation of activity. Our advice for investing in real estate at 60.
Borrowing becomes more difficult
Would you like to stay where you have forged a network of knowledge and activities or would you like to move to another region to discover a new city and forge new links? If the reflection leads to the purchase of a new home, it is necessary to be aware that investing at an age close to retirement presents particularities, in particular with regard to the subscription of a loan.
Indeed, the bankers decide to grant it or not according to the risk incurred. If you apply for a loan around age 60, your banker will necessarily take into account the drop in income related to retirement. The ideal is therefore to have a property to sell, which will constitute a contribution to buy the new one and reassure the banker.
If you don’t own real estate, a savings mattress will do. The bank will take another risk into account: your state of health. Indeed, any credit subscription is accompanied by insurance which allows the bank to be reimbursed if the borrower can no longer pay his monthly payments (because he falls ill and can no longer work, or in the event of death. ).
At age 60, the risks are statistically greater than at age 30 and health insurance is therefore logically more expensive. “This can add 1% to the interest rate offered by the bank, which is not negligible”, explains Astrid Cousin, spokesperson for insurance broker Magnolia.
Do not exceed the rate of wear
Seniors also run the risk that the file will go beyond the usury rate, namely the ceiling above which banks can no longer lend. It is currently 5.55%. This rate is intended to protect borrowers but, paradoxically, it can backfire. In fact, the rate includes all the components of the credit and, in particular, all additional costs such as administration fees. This is why it sometimes happens that the credit approaches the threshold of usury and is refused for this reason.
Find borrower insurance
As for people who suffer from a chronic disease (diabetes, back problems …), it is sometimes impossible for them to find borrower insurance. To pay less and avoid credit exclusion, one of the solutions is to find insurance yourself and avoid that of the banks.
These generally offer higher than average “group insurance” because the banking establishment receives remuneration if the borrower takes it out. It is therefore preferable to negotiate your insurance yourself through a broker, such as Meilleurtaux, Empruntis, Cafpi, Magnolia, or by asking insurance companies such as Allianz or April. And if you have not taken these steps, no worries: it will be possible to change insurance in the year of subscription, and each year on the anniversary date of the contract.
Avoid bridging credit if possible
Suppose you own a piece of real estate and plan to sell it to buy another. If you find the property of your dreams before selling yours, then you may be forced to take out a bridging loan. Concretely, the bank estimates the value of the property which you own and advances you up to 80% of this amount. If you need a supplement to buy your new home, the bank will grant you another loan.
The danger is that if you don’t sell your property within the one-year period, for whatever reason, both loans will mature and you will have to pay a large sum.
A rapid turnaround in the economy or even a problem with the health situation which is blocking the real estate market can lead to such a configuration.
If you can, it is therefore preferable to avoid a bridging loan, and to do everything possible to sell your property first and then buy the new one, when you actually have the money in your bank account.
You will eventually be able to buy your new home with cash, which is very popular with buyers and sometimes allows you to get past other suitors for real estate. And if you still need to take out a loan, its rate will be much more interesting. The disadvantage is that it is imperative to have left the accommodation sold and emptied the premises of everything it contains. If the time between the sale of your old one and the purchase of your new home is not optimal, you will have to go through the rental stage, and put your furniture in storage for a few months if necessary, the time to sell and to get the money back. You have to factor this into your budget.
To know : in some cases, a bank may grant credit without borrower insurance. If the latter has real estate or savings, which can guarantee the credit, ensuring the bank to be reimbursed in the event of default. But that implies owning significant assets, which would almost allow you to buy without borrowing.
CHOOSE BETWEEN NEW AND OLD
When buying for retirement, is it better to buy new or old? By new, we mean housing less than 10 years old and still covered by the ten-year guarantee. The old gathers everything else, so the choice is vast in this category. New has the advantage of being very economical in energy expenditure and under warranty. Equipment, such as doors and windows, is guaranteed for 2 years and all structural work is guaranteed for 10 years. The new one is also more practical for people with reduced mobility, with an elevator and toilets easily adaptable to the handicap. But you will have to be patient if you buy off plan.
Between the time you make the reservation for the property you like and the time you move in, it can take 2 years. The old one has the advantage of being less expensive but it is also sometimes less practical and less well suited to the needs of an older person. Whatever your choice, you must visit the accommodation carefully. Don’t ignore the neighborhood review, just as important as the accommodation itself.