Hardening access to credit
First of all, remember that the crisis environment is not very favorable for borrowers even as interest rates reach historically low levels. This paradox is mainly due to the accounting constraints imposed on banks by regulators in international agreements known as “Basel III”.
The latter are obliged to rebuild their own funds and to reach a floor ratio of 7% by 2019. To achieve this objective, the banks have therefore decided to reduce the risks related to loans , which leads more severe selection of claims and partly explain why it is difficult for some retirees to obtain credit.
The pension guarantee
Know first of all that you have a great asset with banks because pensions are guaranteed by the state. In fact, unlike employees, your income can not decrease and the risk of over-indebtedness is less important than for a young worker who can become unemployed overnight.
On the other hand, even though seniors consume more today than previous generations, banks know that retiree bank accounts are well maintained.
To know : if your financial situation is weakened by the subscription of several loans to the consumption, know that you can address to organizations specialized in the repurchase of credit for the seniors.
Problems related to age
For a retiree, the main difficulty in obtaining a loan is the access conditions of the inevitable insurance contract . It is generally of two kinds:
- Most contracts have age limits.
- Contributions are particularly high after the age of 60 and can be dissuasive.
Solutions to guarantee borrowing
Therefore, the solution is to find alternative formulas. At first, it is advisable to put the group insurance contract in competition. In case of failure, you can offer a replacement warranty.
The external delegation
Know first that since the Lagarde reform, the bank can no longer impose its group contract. So you can play the competition.
This solution may eventually allow you to find a contract with more flexible guarantee limits since the death and disability cover sometimes goes up to 85 years. They often allow retirees to be able to take out a mortgage for periods of 10 or 15 years for example.
On the other hand, the contracts external to the bank are individual and the contributions are generally higher.
Pledge a life insurance policy
Another solution is to offer the bank to put a life insurance policy in pledge (or any other form of investment) to replace death and disability benefits. If this formula is chosen, you will realize a significant saving. On the other hand, your savings will be “frozen” during the loan period.
On the other hand, be aware that placement media will have to offer maximum security. For example and on the basis of a yield assumption of 3%, to guarantee a loan of 100,000 euros over 10 years, you must pledge a capital of € 75,000.
Delegate an existing provident contract
If you have already been insured for the death and disability benefits, you can very well put the contract as collateral for the loan. To do this, simply change the beneficiary clause to the benefit of the lender. The formalities are relatively simple to accomplish but the contract will have to relate to sufficient amounts.
Mortgage life credit: the ultimate resource for retirees
Finally, for those who face a refusal, mortgage life loan is perhaps the last solution available to you. This credit is granted regardless of the state of health and regardless of the debt situation of the borrower. The reason is the total deferral of repayment.
However, this formula will hurt any heirs. Indeed, the capital will be deducted at the time of death and will require the sale of the mortgaged housing. In addition, the unpaid interest in turn produces interest and the loan is ultimately extremely expensive.