Home Equity Release

Need a little extra money? The solution could be closer to home than you think.

The majority of Australians spend their working lives paying off their home. So by the time they've retired, many of them don't have the extra money to do the things they've always dreamed of, such as seeing the world - or just more of the grandchildren. For some its about fixing up the kitchen, being able to afford an accommodation bond so they can enter a retirement home or just getting a little bit more income to enjoy a more comfortable lifestyle.

The reasons are wide and varied - but they all cost money.

Your home may help provide a solution

The good news is that your home could repay you, literally, through a home equity release loan, also called a reverse mortgage. These loans are generally designed for seniors and enable a person to release equity in their home, while they are still living in it.

A Home Equity Release loan will generally have the following features1:

  • The equity in your home is used as security for the loan
  • You can draw a lump sum payment or a regular income stream to supplement your current income or even set up a line of credit you can draw on in the future
  • Because no regular repayments are required and interest charges accrue for the term of the loan, the loan increases over time
  • You can stay living in your home and the loan only needs to be repaid when the home is finally sold, you move out of the property or the property passes to the estate of the last remaining borrower
  • The lender guarantees that you will never owe more than the value of the home

Frank & Joyce's Story

Frank and Joyce had been married for 45 years. Yet Joyce had never visited the town where Frank was born. They also needed to replace their car. The problem was finding the money.

Then Tony, a ClearView Financial Adviser, showed them how they could restructure their assets and use a Home Equity Release loan to access the equity they had in their home while they were still living in it.

Not only could they withdraw a lump sum of $40,000, they could retain ownership of their home and don't have to worry about making a single repayment until the day they decide to sell their property, move out or the property passes to their estate. And, through some of the other strategies Tony put in place, they received more Age Pension than they had been getting before.

The story has been compiled using real life customer situations experienced by our Advisers to illustrate how they may be able to help you. It is based on laws current as at 1 January 2006. To ensure privacy, personal details have been changed and the full basis of the recommendations not disclosed.

This is a general statement on Home Equity Release loans. The terms, conditions and benefits will vary from product to product.

Why you need to speak with a specialist Financial Adviser

Home Equity Release loans are becoming increasingly popular among Australian retirees. However, if you're considering such a loan, it's vitally important that you speak with a Financial Adviser who is accredited to advise on these issues and is a specialist in retirement financial planning. This is because there are a number of different factors that need to be examined, such as:

  1. How much equity will be left in the property when the loan is repaid for your beneficiaries to inherit.
  2. Whether your Age Pension entitlements will be affected.
  3. Choosing between a lump sum or regular payments.
  4. Choosing between a variable interest rate or a fixed interest rate.
  5. Looking at the alternatives to a Home Equity Release loan, such as downsizing or simply restructuring your savings and investments to achieve more income or pension.

For more information

Request a free information booklet

To find out whether meeting with a ClearView Financial Adviser could be of benefit to you, call ClearView Retirement Solutions on 132 976 or complete the form.

Advice in relation to Home Equity Release loans is just one of the ways a ClearView Financial Adviser may be able to help you have a more comfortable retirement.