How to prepare an acceptable exit strategy for your home loan?

What is an exit strategy?

It is a plan for what will happen to your home loan when you retire. The lender / lender must ensure that you can pay the repayments without having to sell your property.

You need to show the lender / lender how to repay your home loan when you retire. The reason why you may need to show the lender / lender of an acceptable exit strategy is best illustrated with the following example. The example assumes:

>> You are 52 years old

>> You want to buy an owner-occupied home

>> You want to apply for a home loan of $ 300,000, and

>> You have $ 300,000 in retirement

From the above example, you can include in your mortgage application that:

>> You have $ 300,000 in retirement

>> You plan to work full-time for up to 65 years, and

>> After you turn 65, you plan to work part-time for 5 years

What do lenders / lenders consider to be acceptable exit strategies?

Some examples of an acceptable exit strategy are:

>> Sale of your investment property or other assets

>> Your income or payment from pension

>> Reduce your property (if possible)

>> Types of investments or other income that you continue to receive during your retirement

How can I show in my mortgage application that I have an acceptable exit strategy?

Here are some ways you can demonstrate that you have an exit strategy. In your mortgage application, state that:

>> You have assets (eg pension or shares)

>> You have equity in another property or real estate

>> You plan to switch from full-time to part-time

>> You plan to retire completely

>> You may receive an inheritance later (this may be acceptable for some lenders / lenders)

>> You are prepared to take out a Reverse Mortgage upon retirement

You should keep in mind that the overall financial position of borrowers plays a much more important role for Australians 50 and older looking to borrow to buy their own home or investment property. This means that a lender / lender must document the position of each client’s assets and liabilities to show how their home loans will be disbursed when the client retires or upon the death of a client. So it is important that you provide an accurate and acceptable exit strategy.

Can someone help me prepare an exit strategy?

You can speak to professionally qualified and experienced financial brokers. They are well versed in what the lenders / lenders want to see in your application and they will:

>> advise you on how to earn extra money during your retirement, and

>> Help you get the comfortable level of excess funds you need to pay off your mortgage debt

They have in-depth knowledge of home loan exit strategies and can help you prepare an appropriate exit strategy (if necessary) because:

>> They understand the importance of presenting all the required information in the best possible way so that the likelihood of loan approval is greatest

>> They are in your corner when they understand how the lenders / lenders work,

>> They can do all the work for you to compile a high-quality home loan application

So don’t worry about finding an exit strategy that is acceptable to lenders / lenders. A qualified financial broker will ensure that you get the home loan easily and without tension.

Source by Frank Zelasko