David Koch provides three ways to shorten your loan time and save big on interest.
Just a dream .. owning a home could mean you are paying off debt until you turn 105 now. Picture: Thinkstock Source: Supplied
FINANCIAL institutions are offering borrowers aged up to 75 home loans leaving them with debts that they will be paying off until they are 105.
About 90 per cent of all loans have no age restriction and the 10 per cent that do are restricted to people aged from 65 to 75, new data by comparison website RateCity found.
But experts have warned of the dangers of lending older Australians with huge debts they will be unlikely to ever pay off.
Financial Counselling Australia's executive director, Fiona Guthrie said there was an increasing number of retirees getting into financial difficulty and taking on mortgages later in life could be disastrous.
"The banks have noticed is that there are more older people post retirement getting into financial difficulty,'' she said.
"We urge a lot of caution around taking out a mortgage when you are older.
"It might be something they want to discuss with their adult children before they do it but be very caution."
She also warned the older generations acting as guarantors for younger generations who had failed to build up a big enough deposit to take out a home loan in their own right.
"We see people who have guaranteed loans and it's gone wrong,'' Ms Guthrie said.
Debt piles up ... these home loans will be tough for many Australians to pay off in their later years. Picture: Thinkstock Source: News Limited
"We see the aftermath of when it goes wrong and it's awful because it tears the family apart."
Figures show Australian capital city property prices rose by 10 per cent in 2013 making it increasingly tough to buy real estate.
New research from the International Monetary Fund this week showed the nation's house prices were the third highest in the world on a house price to income basis.
RateCity chief executive officer Alex Parsons said despite an ageing population signing up to a home loan later in life could be "dangerous."
"I know the Australian population is getting older but being able to take out a mortgage at 75 years of age for a 30-year term is really taking it beyond,'' he said.
"Considering most people's income at that point will consistent of superannuation or a pension their ability to pay that back is relatively limited.''
In the UK loans are being offered to anyone under the age of 70 and can last up to 35 years.
The Australian Bankers' Association chief executive officer Steven Munchenberg said banks were required to abide by responsible lending laws and ensure they did not provide a mortgage unsuitable for a customer.
"Banks take into account a number of factors when making a decision whether to lend to a potential customer, such as whether a customer is able to service the loan repayments,'' he said.
"They may inquire about a customer's age as part of a lending decision, but by law they cannot discriminate against a customer merely because of their age.
"Given the average Australian can expect to live to just over 80 years, to require banks to ensure a mortgage is paid off before a customer dies would mean that few people over 50 could get a mortgage to buy a home."
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