Can I contract Home Loans when I am 65 years old?

March 27, 2023

You have probably thought about this question, if only out of curiosity. After all, what is the maximum age to apply for a mortgage?

In April 2022, the maximum periods for contracting housing loans were modified by the Bank of Portugal, in order to lower the average maturity of new contracts. Therefore, the maximum deadlines now work as follows:

  • Customers up to the age of 30 have a maximum term of 40 years to pay off their credit to the bank;
  • Customers between the ages of 30 and 35 have a maximum recommended term of 37 years;
  • Customers over 35 have a maximum term of 35 years to repay the loan amount.

It is important to stress that these are the maximum terms allowed and that each banking institution sets its own age limit at which someone can take out a loan, the vast majority being up to the age of 75.

In addition, the later you resort to financing, the greater the associated risk and therefore more collateral will be required, and it also has other associated disadvantages such as an increase in the value of life insurance.

Let’s take the example of Maria, now 50 years old, who went to bank X to apply for financing. He was told that he would have to pay off the entire loan in 25 years, so as not to exceed the maximum allowed age. This means that Maria will have to pay higher monthly installments (since the term is shorter), but on the other hand she will pay a lower total amount of interest, and the total amount charged to the consumer (MTIC) will be lower. For those who can afford it on a monthly basis, it turns out to be advantageous in the long run.

Here are some tips in order to get better financing conditions if you have in mind to borrow at an older age:

  • Have a younger guarantor associated (someone who is not 70 years old by the end of your credit repayment term and who has a stable financial situation);
  • To have one more holder associated with the credit contract, with him/her assuming the payment of your installment in case of unforeseen events;
  • If you can afford it, it is quite advantageous to put up a higher down payment (lower LTV (total value of the loan compared to the value of the house), lower monthly payments and, consequently, a lower debt-to-income ratio).

If more than one holder is responsible for the mortgage, the age that is considered for the maximum term is that of the oldest holder.

The minimum age to take out a housing loan is 18. In this case the maximum term of 40 years applies to make the repayment of the total amount.

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