Does The National Consumer Credit Act Discriminate On Age Alone?
The Mortgage Gallery Rockingham
Home Loans, Personal Loans, Mortgage
Experts within the mortgage industry have disagreed over the interpretation of some of the rules within the National Consumer Credit Protection Act 2009, which has resulted in some people being discriminated against, because of their age. In particular, the Act accidentally targeted some people’s ability to repay the loan, causing elderly discrimination.
The difficulty is found in s118(3) which states that if borrowers can only repay their loan from the sale of their principal place of residence, a major problem occurs, because this will obviously place the borrowers in substantial hardship if this takes place. If this has happened to you, you should seek the advice of a mortgage broker in your area, quickly.
If you need a mortgage broker in Kwinana, Rockingham, or Cockburn, we can help.
What Did the Act Intend?
However, that isn’t quite how the act meant that section to be understood because you do need to look at the greater financial circumstances of the borrower. High numbers of people sell their larger properties when they reach retirement so that they can move into smaller properties which are much easier to manage and of course, have lower annual expenses.
Some people are currently being refused a suitable loan because the lender is taking that section of the act and applying it without any leniency. The act, however, also says that the lender can allow the borrower a mortgage if the mortgagee can prove their financial circumstances are not reliant on selling a property to repay a loan. Confused? If you’re near Cockburn, for example, talking to an expert in home loans in Cockburn can clear the confusion. A local mortgage broker can be a definite asset to you and usually at no cost to you.
Some people are lucky enough to have sufficient funds held elsewhere and simply choose to take out a mortgage on the property to leave the funds untouched, perhaps because they are making more interest or dividends on those funds than the expense of the mortgage interest rate. Other people have second properties or know that they have an inheritance on the way which will clear the debt when they are moving into retirement and losing their regular salary.
Lenders Should Act Appropriately
Therefore, the lender needs to make further enquiries and investigate how a borrower intends to clear the mortgage debt in the future and to see whether people have plans to downsize to a smaller property.
It is clearly wrong for lenders to make assumptions about people’s financial planning, just because they are nearing the age of retirement. Only with a full set of information can a lender make a justified decision to offer a mortgage, or to refuse.
Essentially, to apply the act correctly, lenders need to ask the right questions to get the right answers and not to naturally assume the worst in all circumstances.
Mortgage brokers in Rockingham, Cockburn, and the Kwinana area understand how the rules should be applied and can help present the right information to a lender, so the mortgage company can make a decision based upon the full facts.
Fortunately, the National Consumer Credit Protection Act does not intend lenders to discriminate against older borrowers. It also does not set out to help lenders refuse loans to senior citizens or to alter the terms of the loan or show age discrimination.
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