How your home could help fund a more comfortable retirement

Accessing the equity in your home can provide the extra funds to live your best retirement. Picture iStock

This is branded content for Inviva.

More and more, Australians over 55 are finding it difficult to rely solely on their pension or superannuation savings to enjoy the retirement they’ve worked hard to achieve. Rising living costs mean many lack the funds needed to support their retirement dreams of a full and happy life free from financial worries.

For many of these retirees, their home is their largest asset, but tapping into that wealth without selling the property can be challenging. That’s where equity release comes in.

A home equity release loan, also known as a reverse mortgage, allows you to convert some of your home’s value into cash for other purposes – renovations, travel, funding in-home care, helping family or simply meeting day to day living expenses – all without needing to sell the property or downsize. The loans can usually be accessed as a lump sum, regular income or a line of credit as and when needed.

And with this kind of loan you get the benefits of being able to access those funds but always retain full ownership of the property so you can enjoy any potential property appreciation, all while staying in the community that you know and love.

Murray, 72, and Margaret, 68*, a retired couple from Castle Hill in New South Wales, recently discovered the benefits of a home equity release loan after they found themselves in the predicament of worrying about having enough money to live comfortably on.

While they had built up a reasonable nest egg, they’d realized their existing retirement savings, and the pension were insufficient to cover their daily expenses and maintain their desired lifestyle. Rising living costs meant their current retirement income was not enough to allow them to enjoy the activities they had hoped to pursue.

That’s when they decided to investigate if a home equity release loan might be the answer.

After consulting a financial adviser about their options, Murray and Margaret approached reverse mortgage specialist Inviva for a loan secured against their Castle Hill home.

They arranged to receive a regular income stream of $3,000 per month, which would last for eight years, by which time they expected they would be ready to downsize and pay back the loan.

The couple said the additional income provided the financial stability they needed, allowing them to travel each year, engage in some new hobbies, and spend quality time with their grandchildren.

“Using the equity in our home to improve our lifestyle was one of the best decisions we made for our retirement,” Margaret said.

Home equity loans give people the ability to do more of the things they love. Picture iStock

“The extra money each month has given us the financial freedom to enjoy our lives without worrying about money. We can travel, spend time with our grandchildren, and we stay living in the area we know and love.”

Andre Karney, the CEO of Inviva, said the company’s goal was to help customers unlock the wealth they have built up in property so they can enjoy a more comfortable and fulfilling retirement, in the home they love.

“By releasing home equity, they aren’t forced to downsize before they are ready and can free up cash to enjoy retirement on their terms,” he said.

While lots of people are taking advantage of the benefits of tapping into their home’s equity there are still some misconceptions and concerns that stop some home owners from considering the option.

“One of the fears people still have is that they risk losing their home with a home equity loan,” said Mr Karney. “But, unlike the reverse mortgages of old, today’s home equity release loans are now heavily government-regulated and come with lots of protections.

“They include features such as a no negative equity guarantee where you can never owe more than the value of the property, and the lifetime occupancy guarantee which means that if the security property is the home you live in and you’re not in breach of your loan obligations, you and your co-borrowers can’t be removed from the property until you are ready.

“Plus there’s the flexibility that means you have the choice whether to make no repayments for the life of the loan or to repay all or part of the loan at any time. It’s up to you and what suits you best.”