Senior citizen bond applicants given a raw deal

Senior citizen homeowners seeking bonds are unfairly risk rated by banks, a scenario that needs to be re-thought.

So says ERA property group CEO Gerhard Kotzé, who notes that older homeowners are frequently better risks than younger borrowers, but that banks tend to frown on granting them loans.

"Not all senior citizens are financially independent of course. It's estimated only one in three individuals in SA are in this advantageous position. However it's patently unjust to penalise those who have established a solid financial base, which they may not wish to tamper with for any number of tax or financial planning reasons.

"Provided such applications are property related and the property itself is the collateral for any new, extended or re-activated bond, I find it difficult to understand why senior borrowers are not more readily accommodated.

"Reasons given for declining such applications vary. One common reaction is that banks look askance at a senior citizen taking on more debt. And while I have a certain amount of sympathy for that view, it should not be used as a blunt instrument for refusals - each case should rather be assessed on its individual merits."

Kotzé says the banks will claim that this is precisely what they do, "but the reality is that senior citizen bond applicants are frequently rejected, even though most bonds have a life of no more than five to seven years on average".

Senior citizens' requirements for additional bond finance could range from the need for additional space to run a small business or consultancy at home, alterations to make life easier for a wheelchair user, adding a small gym or a spa bath for health reasons, or simply to enhance security.

"Whatever the motivation or rationale for a late-in-life bond application, it should be a case of individual assessment of each case on its merits, based on a financial analysis by the banks.

"More specialised senior citizen bond products are also clearly needed - products which in my view would in no way offend the need for responsible lending in an admittedly over-borrowed market."

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