As property prices rise, many are exploring ways to tap into their home equity to enhance their lifestyle in retirement. Your home is often your largest asset, but accessing its value can be challenging, especially if you need to sell and buy in a hot market.
1. Government Home Equity Access Scheme
The Home Equity Access Scheme offers loans to eligible seniors, secured against your home. You can choose a lump sum or fortnightly tax-free payments. Repayments can be made at any time, and if you sell your home, the loan is repaid from the proceeds. The current interest rate is 3.95%. If there’s any outstanding balance after your death, it will be recovered from your estate.
2. Home Reversion: Sell a Share of Your Property
Home reversion allows you to sell a percentage of your home’s value in exchange for a lump sum or regular payments. You stay in the property rent-free, but when it’s eventually sold, the provider receives the agreed percentage of the sale price. This option avoids interest but involves transaction fees.
3. Alternative Strategies: Downsizing and More
Consider downsizing to a smaller home, which can help clear your mortgage and provide extra funds. If you’re 55 or older, you can contribute up to $300,000 from the sale into your superannuation fund, beyond the usual contribution caps. Alternatively, converting your home to dual occupancy or subdividing a large block could also be viable options.
4. Integrating Aged Care Options
As you plan for retirement, it’s also wise to consider potential future needs for aged care. Your home equity can play a significant role in funding quality aged care services. There are several ways to integrate aged care into your retirement planning:
- Home Care Services: If you prefer to remain in your own home, using your home equity to fund home care services can be an excellent option. These services provide assistance with daily activities and medical needs while allowing you to stay in familiar surroundings. These services can be paid privately or be subsidised by government funding as home care packages.
- Home Care Packages: The government offers various aged care packages that can be partially funded through your home equity. These packages range from basic care to more comprehensive support, depending on your needs.
- Aged Care Facilities: For those considering moving into a residential aged care facility, tapping into home equity can help cover entry fees, daily living costs, and any additional services required. Understanding the costs and financial implications of these facilities is crucial to making a well-informed decision.
Our Aged Care Adviser Specialist, Melody Edwards, can provide detailed information on integrating these options with your retirement plan. She will help you assess your needs, explore suitable care solutions, and develop a strategy that ensures both your financial stability and quality of care. Contact Melody today to discuss how you can effectively incorporate aged care considerations into your retirement planning.
Exploring these strategies with our guidance can help you make informed decisions tailored to your financial situation and retirement goals. Reach out to our Mortgage Broker, Kristi, who can provide personalised advice and help you navigate the options to ensure a comfortable and financially secure retirement.
Like to learn more? Contact us today and allow us to help you to home equity plans.
