Do you know how retirement home loans work?

Can You Get a Home Loan After You Retire?

You can get a home loan after retirement, but lenders assess your application based on ongoing income rather than age. The focus shifts to proving you can service the loan using superannuation drawdowns, pension income, rental income, or other consistent sources rather than relying on employment.

Most lenders will assess your borrowing capacity based on income you can demonstrate for the life of the loan. If you're 68 and applying for a 30-year loan, they'll want confidence that your income sources remain stable until you're 98. That doesn't mean you need to be employed. It means your income needs to be verifiable and sustainable.

Consider someone downsizing from a larger property in the northern suburbs into a villa in Joondalup. They've sold for $680,000 and want to purchase at $520,000, leaving them with a comfortable buffer. Even with $160,000 in equity, they still need a loan of around $360,000. If they're receiving the Age Pension and drawing a modest amount from super each year, a lender will calculate serviceability based on those combined income sources. The loan structure might include a shorter term or interest-only period to manage repayments within their budget.

How Lenders Assess Income From Superannuation

Lenders treat superannuation as assessable income if you can show regular, ongoing drawdowns. They typically calculate a percentage of your super balance as annual income, factoring in how long that balance needs to last and whether drawdowns are structured or ad-hoc.

Some lenders will accept account-based pensions or transition-to-retirement income streams as verified income. Others require evidence of at least 12 months of consistent withdrawals before they'll include super in serviceability calculations. The loan amount you qualify for depends on how much you're drawing, how much remains in your fund, and how that aligns with the loan term you're applying for.

If you're moving into a retirement village or over-55 community near Central Park or the Joondalup Health Campus, the property type also affects how lenders view the application. Some retirement villages operate on lease arrangements rather than freehold title, which limits your home loan options to specific lenders familiar with that structure. Freehold villas and land-lease communities are generally more straightforward.

Does a Shorter Loan Term Improve Your Chances?

A shorter loan term improves your chances because it reduces the period over which you need to prove ongoing income. A 10-year loan term is often more achievable for retirees than a 30-year term, particularly if you're using super or pension income.

The trade-off is higher repayments. A $300,000 loan over 10 years at current variable rates means monthly repayments around $3,200, compared to roughly $1,800 over 25 years. If your income can't comfortably cover the higher amount, a longer term with lower repayments might still be possible depending on the lender and your age.

Some retirees structure the loan as interest-only to reduce repayments, particularly if they're planning to sell within a few years or expect an inheritance or investment maturity to pay down the principal. That approach works if you have a clear exit strategy and the lender is comfortable with your income supporting interest payments long-term.

What About Pension Income and Centrelink Payments?

Most lenders will accept Age Pension income as part of your serviceability calculation, though some apply a reduction factor or cap how much they'll count. If you're receiving the full Age Pension and have additional income from dividends, rent, or part-time work, that combination strengthens your application.

Centrelink payments are verified through your income statement, and lenders usually want to see at least three to six months of consistent payments. If your pension amount fluctuates due to assets or income tests, that can complicate serviceability. Some lenders are more flexible with how they assess this than others.

If you're considering a refinance on a property you already own in Joondalup, moving from a loan you took out while working to one structured around retirement income, the same serviceability rules apply. You'll need to demonstrate that your current income supports the loan, even if you've been paying it without issue for years.

Can You Use Rental Income From an Investment Property?

You can use rental income from an investment property, and lenders typically assess 80% of the rental amount as income to account for vacancy periods and maintenance costs. If you own an investment property in Edgewater or Currambine and it generates $500 per week, lenders will generally count $400 of that toward serviceability.

If you're downsizing and planning to rent out your previous home rather than sell, that rental income can form part of your application. The lender will want a lease agreement or rental appraisal, and they'll factor in any mortgage or costs associated with that property when calculating your overall position.

Combining rental income with pension payments and super drawdowns gives you multiple income streams, which can improve your borrowing capacity and make it easier to secure a loan amount that suits your needs.

How Does Lenders Mortgage Insurance Affect Older Borrowers?

Lenders Mortgage Insurance applies to any loan with a loan to value ratio above 80%, regardless of your age. If you're borrowing more than 80% of the property value, you'll likely need to pay LMI unless you qualify for a specific exemption or profession-based waiver.

The challenge for retirees is that some LMI providers have age restrictions or won't insure loans where the borrower is above a certain age at the end of the loan term. That can limit your options if you're applying for a longer loan term with a smaller deposit.

If you're purchasing in Joondalup with a 15% deposit and need to borrow 85% of the property value, the LMI premium could add several thousand dollars to your upfront costs. Increasing your deposit to 20% removes that cost entirely and opens up access to lenders who won't consider higher LVR loans for retirees.

Should You Consider a Fixed or Variable Rate?

The decision between a fixed rate and variable rate depends on whether you prioritise repayment certainty or flexibility. A fixed interest rate locks your repayments for a set period, which can help with budgeting on a fixed income. A variable rate gives you access to an offset account and the ability to make extra repayments without penalty.

If you're planning to make lump sum repayments from the sale of assets, an inheritance, or a maturity, a variable rate gives you more control. If your income is predictable and you want to remove the risk of rate rises, fixing part or all of the loan can provide stability.

Some borrowers split the loan, fixing a portion to manage repayment risk while keeping the remainder variable to retain flexibility. That approach works well if you're not certain whether you'll need to access equity or pay down the loan early.

What Documentation Do Lenders Require?

Lenders require proof of income, identification, and details of your assets and liabilities. For retirees, that typically includes your superannuation statement, Centrelink income statement, bank statements showing regular drawdowns or pension payments, and evidence of any rental or investment income.

If you're applying jointly with a partner, both incomes are assessed. If one of you is still working and the other is retired, the combination of employment income and super or pension income can strengthen the application and increase the amount you can borrow.

You'll also need to provide a contract of sale or property details for the home you're purchasing, along with identification and proof of your deposit. If you're selling a property to fund the purchase, the lender will want confirmation of that sale and the expected settlement date to ensure timing aligns.

Why Speaking to a Broker Makes a Difference

Every lender has different policies on retirement income, loan terms, and age limits. Some won't lend past age 70, others will consider applications up to age 80 or beyond depending on your circumstances. Knowing which lenders assess super income favourably and which require employment income or guarantor support saves time and improves your chance of approval.

If you're purchasing a retirement home in Joondalup and want to understand your options, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions