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Retirement Age Borrowing Power Calculator
Enter your details below and discover whether your exit strategy for a home loan will be acceptable to the bank.
Exit Strategy Calculator
Does your exit strategy stack up?
If you’re close to retirement age, lenders typically require you to provide an exit strategy for how you plan to pay off your home loan.
The bank may knock back your home loan exit strategy if your plan is deemed high risk or unrealistic, or doesn’t otherwise meet te lender’s policy.
The solution:
Your exit strategy will depend on your asset position, income and retirement plans.
We can help you choose a lender that will take a common sense approach to your situation and future plans.
What is a mortgage exit strategy?
An exit strategy is effectively a backup mortgage repayment plan.
Technically, all home loans have an exit strategy. It’s paying off the mortgage over 30 years. Lenders require you to provide an exit strategy only when the standard one doesn’t work.
For example, many wharves in Sydney have luxury leasehold units in them. Since they’re over water, they have a 99-year leasehold title instead of a freehold torrens title.
The lease may have only 20 years remaining at the time you buy it. In this case, lenders won’t accept a 30 year loan term. In most cases, the exit strategy is to shorten the loan term to be 5 years shorter than the remaining lease term.
Development loans generally also require exit strategies. A property developer may not afford to keep all of the units when the building is complete. So, the bank accepts an exit strategy of selling some or all of the units.
What’s considered a good mortgage exit strategy?
There’s no such thing as the best strategy! But you can aim to have the best mortgage exit strategy that suits you the most and still acceptable to the lender.
Lenders commonly accept strategies that include:
If your strategy doesn’t work, it may be better to avoid getting a mortgage. Apply only when you’re sure that you can afford making the mortgage repayments.
What’s considered a bad exit strategy?
Generally, the following are usually not acceptable as an exit strategy for mature borrowers:
However, there’s a lot of grey areas here. We’ve seen lenders make exceptions and approve people with exit strategies similar to these where we could provide evidence and their strategy made sense.
Downsizing as an exit strategy
Downsizing to a smaller house when you reach the age of retirement is accepted by a few lenders as an exit strategy, however, not all do.
Many of our customers have successfully used downsizing in combination with their super balance or investments to make it a solid plan.
When using this strategy, you’ll need to provide details such as:
Please note that in cases, where you already live in a two-bedroom unit or smaller, it’s difficult to convince lenders that downsizing is a viable option.
Exit strategy home loan templates
Here are a couple of exit strategy home loan templates that demonstrate how downsizing can be utilised as an exit strategy. Both home loan exit strategy letter examples were approved by the lenders.
Mortgage exit strategy FAQs
Do investment properties need exit strategies?
You actually don’t need an exit strategy on an investment property. This is because you can sell it anytime without financial hardship.
Under the National Consumer Credit Protection (NCCP) act, you’re considered to be in financial hardship only if you can’t pay off a mortgage without selling your home.
However, some lenders don’t approve mortgages for investment properties unless you provide an acceptable exit strategy.
You can speak with a mortgage broker like us if your lender asks for an exit strategy for your investment loan. We’ll help you find a new lender.
What if I own a business?
If you’re a business owner, you may still be earning an income past the normal retirement age. This typically depends on whether or not:
We can present a case to some of our lenders to show that you can continue to make your mortgage repayments past the normal retirement age.
What documents do I need to provide with an exit strategy?
Depending on what exit strategies you use, you’ll have to provide different documents but generally you’ll need:
Golden tips for mature borrower
Follow these three golden tips as these are the key to getting approved for a home loan as a mature borrower:
Who can help me prepare a mortgage exit strategy?
Professionally qualified and experienced mortgage brokers can help you prepare an acceptable exit strategy.
Our mortgage brokers know and understand the policies of the major lenders. They are credit specialists that know which banks have more lenient lending guidelines.
You can call us on 0862430351 or complete our free online assessment form and one of us will contact you to discuss your situation and loan needs.
Why use us?
We aim to set an example by delivering what we promise: a higher level of service, better advice and better home loans.
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How we find you the right solution
Complete our free assessment form or call us.
We assess your situation.
We look at all the options from our panel of lenders.
We will find you the most suitable home loan deals.
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