For retirees, it is best to live with cash. Wherever possible, try to pay with cash. Normally, a loan is taken to finance something that you cannot afford. So, for the retirees who do not have a steady income should avoid this kind of situation.
Sometimes, unforeseen events or emergencies may compel you to borrow. For example, an offspring may encounter financial problems and most of the parent may find it difficult to support. Or may be you start a business or invest in properties. It’s not surprising to find them applying for business or personal loans to finance their desire path. Apart from that, they might need to get housing loans from bank if they are quite active in the property market which encourages them perform buy and sell.
Most of the retiree nowadays will take loans to buy new cars or refinance their homes. Some of them may prefer to get a loan when purchasing big ticket items although they can afford them. This is because they think that they will be audited by the Lembaga Hasil Dalam Negeri (LHDN) if the items are paid in cash.
Generally, financial institutions deny loans to those who are not earning an income. Here are few tips to increase your chances of getting a loan before retirement age:
Take the Loan Before Reach 60
A set of lending guidelines was implemented by each financial institution which is for banks to manage its risk and return. Age is a variable that bank controls through its lending guidelines.
So, if you want to get a loan during retirement then it is best to take it before you reach 60. The most ideal time is between 50 and 55.
Cut Margin of Finance or Loan Tenure
Nowadays, some financial institution prefers to give out lower margins of finance as they want to decrease the possibility of non-repayment loans.
If you are 50 and want to get a 15-year loan, the financial institution may be concerned. But, if you want to get 5 or 10 years loan, they are more comfortable with it. However, it’s easier for retirees to obtain car loans due to it has shorter tenures of 3 or 5 years.
Document your Sources of Income
One of the most important aspects of getting your loan approved easily is your repayment capacity. You must to prove that you can payback.
If you are going to use rental income to support your next housing loan application, then you need to provide proper documentation. For example, you can keep all records of your tenant payments and prove that.