It may be that time in your life where work has become a distant memory, the kids are all out of home and you’re enjoying being a man or lady of leisure. While you’re retired and living without the stresses of work you can still find yourself under financial pressure in your twilight years. You never know what unexpected expenses may arise and you need to take out a pensioner loan for some extra cash. It may be for a new car, sudden medical expenses or household appliances.
Loan options are limited for pensioners or retirees as it’s hard to prove to a lender you can make the repayments when you don’t have a regular income and are living from pension cheque to pension cheque just covering daily expenses. If you have a substantial amount of money sitting in a bank account then you’re in a much better position to prove you can make repayments and therefore borrow more money from a lender.
While there may be obstacles for pensioners when it comes to securing a personal loan rest assure there are still options to help you out when things get a little tight.
Personal loan with current provider: It pays off to have held an account with a financial institution for a significant period of time. They are familiar with your financial history and are more likely to offer you a personal loan than if you were to apply from scratch with a new lender. Head to the Mozo guide on types of personal loans to learn more.
Reverse mortgage: These loans are for retirees and pensioners who are usually ‘asset rich’ but ‘cash poor’. It allows people from the age of 60 to reverse the equity in their property into cash. You don’t need an income to qualify nor do you need to make repayments but like any personal loan, interest is charged and there are fees. The debt is repaid to the lender, when the borrower sells the property, moves into a retirement home or the last surviving borrower dies. Mozo doesn’t keep information in its database on providers that offer reverse mortgages, we suggest you check out the Government’s MoneySmart site for more information.
If you’re struggling to get approval for a loan from a financial institution, the Government has implemented some special schemes to assist people on the pension.
For more information www.humanservices.gov.au
It’s very easy to fall for those loud in your face ads that flash before you during late night TV offering fast, instant cash loans. These ‘payday loans’ may appear easily attainable, providing a quick fix when times are financially tough but they aren’t as pretty as what they may seem. Mozo does not support these lenders for the following reasons:
Read Mozo’s insight into short term personal loans.
While you embrace retirement you may find you have some extra time on your hands. Did you know you can still remain in the workforce while on a pension? The Work Bonus is a Government incentive for pensioners to remain in the workforce past age pension age by increasing the amount you can earn before your pension is reduced.
Here is a list of ways to earn some extra cash without having to take out a pensioner loan: