Sixty is the new 50 even when it comes to mortgages. It's often said that after the age of 50 borrowing becomes difficult, if not impossible. Tell that to the 68-year-old who organised a mortgage this month through Peter Norris of Aspire Advisors.
Banks don't assume these days that we all retire at 65. If someone has a desk job, banks will accept that they won't necessarily be hanging up their suit for the last time when they hit retirement age.
Sometimes the bank will require a higher loan-to-value ratio for an older borrower, says Morris. His 68-year-old client needed a 40 per cent deposit. Sometimes it might mean a shorter term to pay off the loan. That might be 15 years to ensure the loan is cleared before the borrower gives up his or her full-time income.
The over-50s commonly borrow on rental property purchases, says Norris. In that instance banks often prefer that the property has a high yield such as an apartment or townhouse. It makes sense, anyway, says Norris, because older borrowers typically want a return from their investment properties.
Borrowers turned down by banks often turn to the non-bank sector, and typically will pay a higher interest rate.
"Apartment lending can be very confusing (for lay people)," says Craig Pettit, mortgage broker at Loan Market. "There is a lot of mis- and disinformation in the market."
Buyers knocked back by one bank often assume that no bank will lend on apartments.
Choose the right apartment and you can borrow 80 per cent, says Craig, because it falls into "standard" lending. In that case, buyers can get more or less the same mortgage they would on a standalone home. If you're willing to take a second mortgage at 13.75 per cent for the final 10 per cent you can get 90 per cent.
If the apartment is "non-standard" it's still possible to borrow, but buyers almost certainly need a higher deposit.
The trick is knowing that every bank sees "standard" as a different thing, says Craig . "People automatically think every bank has exactly the same lending policy and they don't."
Size does matter when it comes to apartments. ANZ, for example, will offer standard lending on a one-bedroom apartment of at least 45sq m, two bedrooms of more than 55sq m and three bedrooms at 65sq m.
Some banks base their lending criteria for apartments around under 40sq m, 40-50 and over 50, says Craig. Other banks simply look at the size of the apartment, not the number of bedrooms compared to the floor area. They will treat sub-40sq m apartments differently to 40-50sq m and more than 50.
Some banks such as the ASB won't lend on for sub-40sq m apartments, says Pettit. Others will, but at higher LVRs. Westpac will sometimes go up to 65 per cent on smaller apartments providing they are freehold not leasehold.
A bank also may not be willing to lend on an otherwise-desirable apartment block simply because it already has too many mortgages on that one building.
Leasehold title adds another layer of complexity, says Craig, but it doesn't make it impossible to borrow.
Some banks, such as ASB, will lend up to 70 per cent on good-quality leasehold apartments. Craig even arranges mortgages on leasehold sub-40sq m "shoe boxes".
Exactly how much the bank will lend will vary according to the type of lease. Some leases terminate after a certain number of years and the land reverts to the owner. Others are leases in perpetuity, with rent reviews every few years. The exact lease will determine whether the bank considers the apartment to be good security, says Craig. The health of the resale market may be the deciding factor.
Investors often find it easier than owner-occupiers to borrow on apartments because they can cross-collateralise against other property and borrow up to 100 per cent of the purchase price that way, says Craig.
First-home buyers can find it difficult to get their foot in the door because they can't use the government's Welcome Home Loan programme to buy apartments.
That means they need a 20 per cent deposit, whereas they might need only 10 per cent for a house or flat that has ground-floor access and isn't on a strata title, says Craig.
Borrowing on a leaky apartment, no matter what the size, can be difficult.
"The banks (mostly) have enough leakers on their books already," says Craig. "You are going to be very very lucky to get [a mortgage] on them."
It's not easy to hide a leaky building issue. Banks, says Craig, check the last two years' body corporate minutes before lending and if there is a leak issue it will show up.