Releasing the value of your property can help you live the life you really want in retirement.
What is a Seniors Equity Release Mortgage?
A Seniors Equity Release loan or mortgage can free up cash flow by unlocking the value built up in a home. The money could be taken as a lump sum or withdrawn in smaller amounts when needed. In most cases, seniors don’t have to worry about repayments. The loan is repaid when the house is sold or the estate is settled. Interest costs are added to the loan, increasing the balance over time. The loan is typically repaid from the estate. Under federal legislation introduced in 2012, known as a ‘no negative equity guarantee’, the proceeds from the sale of the home will always be enough to repay the reverse mortgage in full, regardless of how long seniors remain living in the home.
Our longevity is increasing, our health in older years is better managed and our standard of living and expectations are also on the rise. This must be a good thing.
In itself it is, but most of us don’t have unlimited income, so how can we possibly finance all these things?
More and more Australians are stopping work earlier than the national standard retirement age. You rarely hear the term “pensioner” now, and instead hear “senior” or “over 55”. Residential living facilities for over 55s are popping up everywhere — people want to enjoy their post-work years. Many want to travel, drink espresso in those classic Italian squares or catch the Rocky Mountaineer through the Canadian Rockies — things they never could have afforded in their younger days while managing the budget for a growing family.
Demographically our landscape is also changing, and the number of seniors is dramatically increasing, which will make it harder and harder for the fewer taxpayers to fund seniors. These are just some of the factors that are contributing towards seniors’ saving shortfalls.
A saving shortfall is the difference between the income that a person needs to support the lifestyle they want and the actual income available to them from sources like savings and pensions. Many seniors today have this shortfall but at the same time they are asset rich. They live in one of their biggest assets — their home.
Homes are so much more than bricks and mortar. They are often a symbol of having "made it”; they could be places where families were raised, and still remain a comfy spot for family reunions.
Any one of these reasons could put you off wanting to sell your home. But if you are struggling a bit and having to cut down on the things you need and the lifestyle you want to lead, then a Seniors Equity Release Mortgage may be the way to go. Your property is valuable.
Seniors who sign up for equity release products use the funds for things like home renovation and repairs, paying off existing debt, travel, new vehicles and aged care facilities. Or you may just want the security of knowing that when unexpected life events occur you can deal with it independently.
It is important that you speak with your family members first before making any decisions regarding your financial future. With so much information in the market today it is important to seek the advice of industry professionals who can assist you with your current situation.
Angela is happy to talk through all the options available and answer any questions you may have regarding Seniors Equity Release Mortgages.