How to get a home loan if you’re a pensioner

Don’t let your age get in the way of purchasing your own home. Here are some tips to help get you started.

Even though some lenders view pensioners as being high-risk borrowers, there are still lenders willing to offer home loans to individuals receiving pension benefits. Read on to learn more about what options are available.

Considerations when applying for a home loan on a pension

Pensioners applying for home loans must keep in mind that their income and financial position might limit their success in getting a home loan. This is mainly because the pension is lower than the normal income of other applicants who are applying and the income level required. If you have assets and believe you can meet lending requirements, it might be a good idea to discuss your position in person with your financial provider or mortgage broker, as applying online may be difficult if you can’t demonstrate your capacity to repay the loan.

Need home loan help? Find a mortgage broker to help you

What types of home loans might be available to pensioners?

  • Reverse mortgages. A reverse mortgage allows you to borrow funds using equity from your home as security for the loan. A reverse mortgage can either be paid as a lump sum, a regular stream of income, a line of credit or a combination of these. No income is needed to qualify and for this reason, the interest rate tends to be higher. You must repay the sum of borrowed money when you sell your home, pass away or move into aged care.
  • Variable rate loans. Variable rate loans are a common loan choice in Australia. With a variable rate loan, your interest rate is subject-to-change based on interest rate fluctuations. For example, when interest rates are low, the interest rate on your loan should also be low, allowing you flexibility and possible cost savings.
  • Fixed rate loans. A fixed rate loan is more secure than a variable rate loan. With a fixed loan, the interest rate for your loan will be set upfront and you commit to this rate for the entirety of your loan. This means you avoid any possible fluctuations in interest rates and you also know your repayments upfront. This kind of loan takes the stress away from worrying about interest rate changes.
  • Line of credit loans. A line of credit is a funding line which uses the equity in your home. It’s an approved amount that you can use a bit at a time or all at once. You loan is approved against a security and you can draw on this loan amount at any time. You only pay the interest on the amount that you use. For example, if you get a line of credit of $200,000 and only use $50,000, you only pay interest on the $50,000. These are good for those who are unsure if they need the full value of a loan.

How to compare home loans

  • Interest rates. Interest rates are one of the most important elements to compare as interest is the biggest expense for home loans. For pensioners, it’s important to look for the lowest interest rate because this is what will help you save money.
  • Home loan flexibility. It’s important for your home loan to provide you with flexibility. This may be flexibility in repayment schedules, flexibility in making additional repayments and redraw facilities. Compare each loan and see what flexibility it can offer you.
  • Eligibility requirements. Some home loans will require you to meet certain eligibilities in order to take out that home loan. This may include a regular source of income, a good credit history and more. Pensioners in particular should compare the eligibility requirements of home loans because some may be more appropriate to apply for than others.
  • Fees and charges. Most home loans have mandatory fees and charges that you may have to pay. Compare any potential fees and charges each loan has - these may be either upfront fees or ongoing fees - and select an option with lower fees to help save money.
  • Loan term. Each home loan provided by financial lenders will have different loan lengths. Compare and select the home loan that provides you with the loan length to meet your needs.

Am I eligible for a home loan if I'm on a disability pension?

Generally, a disability pension is considered a valid form of income by most lenders. Therefore a home loan application for someone on a disability pension is not treated any differently from an application where someone services their loan with other forms of income.

Like any applicant for a home loan, the lender will review whether the amount of income support you receive is sufficient for you to comfortably repay the loan.

Most lenders will review your application on a case-by-case basis. Your eligibility for a home loan will depend on the amount of income you receive and how much of this can be used to service a loan.

Other factors including your age, assets and debts will be assessed by a lender on an individual basis.

Each lender will have different eligibility criteria, so it’s best to speak directly with your mortgage broker or lender to determine whether a home loan is suitable for you.

Extra documentation for disability pensioners

Among other eligibility criteria required by the lender, you’ll generally need to provide the following:

  • Evidence of funds to complete the deposit.
  • Bank statements showing Centrelink benefits being paid into your bank account (i.e. some lenders require 6 months of recent bank statements).
  • Letter from Centrelink confirming the status and nature of your disability pension.

Am I eligible to receive a home loan if I receive the Veteran's Pension?

Many lenders may accept a Veteran's Pension as a source of income for a home loan. This applies if you are receiving:

  • Department of Veterans' Affairs War Widows or Widows Pension
  • Department of Veterans' Affairs Service Pension
  • Department of Veterans' Affairs Age Pension

Additionally, lenders may accept the Department of Veterans' Affairs Incapacity Pension as a source of income.

In order to demonstrate your pension as a source of income for a home loan application, you'll need either a current bank statement showing your pension payment, or a current Department of Veterans' Affairs statement.

Pros and cons of home loans available to pensioners

Pros

  • Gives you funds when you need it. These home loans allow pensioners to enter the property market and give you the funds you need, when you need them.
  • Extra benefits. Some home loans available to pensioners come with extra benefits such as low or no interest rates, flexible payment plans and advance payments.
  • No proof of income required for reverse mortgages. With reverse mortgages, no proof of income is required. It’s important to note that other home loans will require proof of income unless it’s a low doc loan.

Cons

  • Higher interest rate. Reverse mortgages tend to have higher interest rates compared to other home loans.
  • Eligibilities. Some home loans have specific eligibility requirements you must meet that may be quite stringent.

Frequently asked questions about home loans available to pensioners

Marc Terrano

Marc Terrano is a Lead Publisher at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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111 Responses

  1. Default Gravatar
    LynetteDecember 6, 2018

    Hi
    Can my husband and I get a fixed, interest only 30 year $150,000 home loan on aged pensions?
    Lynette

    • finder Customer Care
      MayDecember 12, 2018Staff

      Hi Lynette,

      Thank you for your question.

      Fixed-rate mortgages have a variety of fixed loan terms and these are offered by many lenders in the market. Given your circumstance, you can speak to a mortgage broker who can help you find a suitable fixed home loan option for you and your husband.

      Hope this has helped.

      Cheers,
      May

  2. Default Gravatar
    christopherNovember 22, 2018

    I m 73 on an aged pension [single]. I receive family tax benefits A & B.I also receives child support of $200 per week. my total income is approx $1400 per fortnight.my mortgage payments with CBA are $ 690 per fortnight [4.67% interest]. I owe $226000 on my home .its valuation is $485000. its located Marysville vic3779.how could I get a line of credit of no more than $20000

    • finder Customer Care
      JoshuaNovember 26, 2018Staff

      Hi Chris,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      While it is true that being a pensioner may limit your options, you might still be able to find a lender who can help you. First, please review the information mentioned on this page to get a better understanding of how you can get a loan as a pensioner.

      If you want to get a line of credit loan, please go to this page. On that page, you will see a table that allows you to conveniently compare a range of personal line of credit loans. Once you found the right one for you, click on the “Go to site” green button to learn more or initiate your application. Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  3. Default Gravatar
    nicholasNovember 10, 2018

    I am 30 and have 3 children, 2 with a Autism, I am currently on the carrer’s pension and my wife is soon to be a fully qualified nurse (full time employment) I was wondering what the chances of getting a home loan would be?

    • finder Customer Care
      JoshuaNovember 25, 2018Staff

      Hi Nicholas,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      Generally, the longer your wife is working as a nurse, meaning, she has a stable source of income, the higher your chance of getting approved. For this reason, it would be a good idea to wait 2-3 months after your wife became a full-time employee before you apply for a loan.

      Moreover, if you are applying for a loan as a pensioner, your income and financial position might limit your success in getting a home loan. Of course, if you have assets that you can use as collateral or you believe you can meet lending requirements, it would be a good idea to discuss your position in person with your lender. You may also speak to a mortgage broker to further know your options.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  4. Default Gravatar
    AngeOctober 6, 2018

    My neighbour is in her mid 60’s and currently renting. She is on a disability pension. Is there any lenders that will provide a loan with only a small deposit or can assets other than a home be used as equity?

    • finder Customer Care
      LouOctober 8, 2018Staff

      Hi Ange,

      Thanks for your question.

      Generally, a person on a disability pension with no other source of income will need to deposit at least 20%. This is because there is no other salary or other sources of income that can be used to service the loan – which means little security in case of a default. Kindly note though that home loan criteria vary from lender to lender. Any other assets that may be in the borrower’s name can be used to boost the home loan application.

      For expert advice on the possible options, your neighbour could get in touch with a mortgage broker.

      I hope this helps. Should you have other questions, please feel free to let me know.

      Cheers,
      Anndy

  5. Default Gravatar
    AmyAugust 19, 2018

    I’m in my late 20s with a Newstart disability pension because I have anxiety. I have a partner who works part-time. I’m a full time student at TAFE at the moment and I’m only getting a small amount fortnightly from Centrelink even though I have the pension card. Would I be able to get a loan? What real estate agent would accept?

    • finder Customer Care
      JhezelynAugust 23, 2018Staff

      Hi Amy,

      Thank you for your comment.

      There are some lenders and institutions that consider pension as income, so you may be eligible for a home loan. It generally depends on how much you earn, what kind of financial situation you’re in and what kind of payments you receive. To find out if you are eligible, read our comprehensive guides to getting a loan on pension. Kindly check this page Home Loans for Centrelink Recipients. This will serve as your guide to getting home loans. You’re best to check with the lender your eligibility first before submitting an application.

      You’re also advised to seek advise from a mortgage broker and discuss options based on your needs.

      Should you wish to have real-time answers to your questions, try our chat box on the lower right corner of our page.

      Regards,
      Jhezelyn

  6. Default Gravatar
    January 29, 2018

    Can you advise lenders that will accept disability pension ?

    • finder Customer Care
      RenchFebruary 8, 2018Staff

      Hi Kate,

      Thanks for reaching out to us.

      Just to confirm if you’re looking to apply for a home loan? If so, there are lenders who might consider you for a home loan, so best to check out and seek mortgage broker’s advice for your lending options.

      In case you are finding a lender who can offer you a personal loan, you may like to check our guide on this page. Those lenders with green checks on that page are the possible lenders you can talk to about your chances of approval/options.

      Hope this information helped.

      Best regards,
      Rench

  7. Default Gravatar
    January 13, 2018

    On this pension have 70% of money already who can do small loan at low rate?

    • finder Customer Care
      RenchJanuary 16, 2018Staff

      Hi Steven,

      Thanks for your inquiry. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      If you receive Centrelink payments, including the pension, and are looking for a loan, you may find your options somewhat limited.

      It’s important to know that there are loans and financing options out there. It’s even more important to know how to compare these options so you find the right product for you. You may compare your options and find out how to apply on this page.

      Best regards,
      Rench

  8. Default Gravatar
    December 3, 2017

    I’m a disability support pensioner whose father was aboriginal does that help with getting some sort of loan I’m 57. Woman. Thx

    • finder Customer Care
      LouDecember 3, 2017Staff

      Hi Kay,

      Thanks for your question.

      Generally, DSP is considered a valid form of income by most home loan lenders. Therefore a home loan application for someone on a DSP is not treated any differently from an application where someone services their loan with other forms of income.

      Generally, unless your father is a joint-property owner, you won’t be able to qualify for the indigenous home loans listed here. But it is worth checking with the lender to confirm this.

      If you are looking for an owner-occupier loan, you may compare your options here. If you need assistance in finding a suitable home loan option for your personal circumstances, you may also consider getting in touch with a mortgage broker.

      I hope this helps.

      Cheers,
      Anndy

  9. Default Gravatar
    regNovember 2, 2017

    Selling current home, looking to downsize. What bank or other financial bodies will lend me money while I am on the age pension and my wife on a disability pension? I what to put in a 20% deposit.

  10. Default Gravatar
    RayOctober 9, 2017

    I’m 69 years old, on an aged pension, married, House valued at $495000, present mortgage $52000. Wish to increase to $65000, but not reverse mortgage. Can anyone help ?

    • finder Customer Care
      HaroldOctober 9, 2017Staff

      Hi Ray,

      Thank you for your inquiry.

      Regarding this matter may want to consult to a mortgage broker before moving forward.

      I hope this information has helped.

      Cheers,
      Harold

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