Home Equity Release: How Different Solutions Drive Different Outcomes

As an Australian retiree, unlocking the wealth tied up in your home can be a game-changer. But have you ever wondered what you can really do with the money? Let’s explore how different amounts of unlocked equity can transform your retirement and your family’s future.

A Little Extra: Enjoy Life’s Luxuries

Releasing a small amount of equity, say up to $50,000, can be perfect for indulging in life’s little luxuries. Treat yourself to a new car, take that dream holiday, complete a minor renovation or simply enjoy a few extra comforts. It’s a great way to make retirement more enjoyable.

A Moderate Boost: Elevate Your Lifestyle

Unlocking a moderate amount of equity, from $200,000 to $300,000 can permanently upgrade your lifestyle. Whether you want to include annual holidays in your retirement plan, eat out at your favourite restaurants more regularly, or pursue your favourite hobbies without worrying about the cost. This level of equity release can make a significant difference to your daily life style and enjoyment in retirement.

A Significant Windfall: Secure Your Family’s Future & Leave A Legacy

Releasing a substantial amount of equity, $500,000 to $1,000,000 or potentially more, can have a profound impact on your family’s future. You could help with home deposits for children or grandchildren, assist with the payment of education expenses or other major expenses. This level of equity release can be a powerful way to leave a lasting legacy.

Home Equity Release Options: Which One is Right for You?

So, how much equity can you unlock? Different home equity release options offer varying levels of access to your property’s equity. Let’s explore the options, from largest to smallest equity release:

• Life Estate: A Life Estate allows for more equity to be released than any other option. Selling your current property to an investor in return for a life estate is the single most effective way of releasing large amounts of equity. Younger retirees can typically unlock around 50% of the equity in their property whilst older retirees may be able to access 80% or more.
• Downsizing: Selling your current home and downsizing can also release substantial equity, particularly if your current home is highly valued and you are comfortable moving into something much cheaper. This can often release 25% to 50% of your home’s equity in the changeover.
• Home Reversion: Home reversion schemes involve you selling the rights to a percentage of the future sale proceeds of your home. These can normally release up to a maximum of 40% of your property’s value.
• Reverse Mortgage: Reverse mortgages can vary depending on your age but can typically release up to 30% of your property’s value.
• Home Equity Access Scheme: The government’s home equity access scheme provides an equity release via a loan that lets you draw up to 150% of the aged pension per fortnight. Note, whilst very cost effective, this scheme has eligibility criteria and limited capacity to provide meaningful lump sums. More information can be found here.

When choosing a home equity release option, consider what you want to achieve. If you want to make a significant impact on your family’s future, options that unlock more equity will give you greater capacity to create a lasting legacy.