Is Ageism In Mortgage Approval Discrimination?

What happens if you outlive your house?  Well, as Glen Frankland found out, the bank won’t make it easy for you to buy a new one if you are a senior! The following post was sent to us by Glen Frankland. Have you had a similar experience?  Are you aware of others who have? Please leave your comments. Let us know if you are interested in further discussion on this issue.

My name is Glen Frankland. I have lived and still do live in Sorrento in the North Okanagan—Shuswap riding for 10 ½ years. I’ve been voting Liberal since Trudeaumania and I’m a member of the Laurier Club.

Consider a mortgage applicant with a $50,000 down payment, a guaranteed stable income for life, no debts, and a credit score of 840. You’d think such an applicant would be a cinch for a mortgage approval, wouldn’t you? Well. You’d be wrong – if the applicant were a senior citizen. The reason? Seniors are not the standard, conventional, predictable customer whose application form conforms to bank policy in every way. The only time mortgage lenders want to deal with seniors is over a reverse mortgage.

In Canada, there is no age limit when applying for a mortgage. The basic qualifying criteria for a mortgage in Canada are the size of down payment, gross annual income, and general financial health. In addition to considering the borrower’s basic income and expenses—principal and interest, other sources of income, heating costs, property taxes, co-signor income, other monthly debt payments—lenders should look at other factors not normally considered. These include the borrower’s assets and other living expenses, the stability of the borrower’s income, including “possible negative outcomes,” meaning variability in the person’s salary or wages, taking a drop from salary to old age pension into account. For seniors, this means a 50% deposit and a pension income equaling the other 50%.

This is a direct result of new regulations on mortgages in response to the Credit Meltdown and these regulations are causing unintended ageism discrimination. Consider: Most seniors have their pension incomes locked in and are not subject to layoff or firings. Some seniors didn’t have a down payment until an elderly parent died. Seniors mainly just want a guaranteed place to live and not have to worry about being forced to move from a rental. Moving is far more difficult and expensive for seniors than for younger people.

When the government talks about senior housing, they mean subsidized apartments which does no good for someone whose hobby requires shop space, such as a woodworker, metalworker or auto customiser.

Ageism is about the only form of discrimination that still exists. Can you imagine the outcry if a mortgage were denied because of religion or skin colour? I would like to see some government movement on this issue. After all – one in five people in Canada are seniors and we are still allowed to vote.

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William Orr
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William Orr

I am desperately hanging on to my house. It would be wise for me to sell now and buy another house in a few years. Except there is no way I could get a mortgage at age 69.