For older Australians, well-being is positively driven by strong financial health and feelings of safety and security, and many would prefer to continue living at home as they age. After all, home is where they’ve raised their families and created so many unforgettable memories with loved ones.
In fact, a 2020 survey conducted by the Australian Housing and Urban Research Institute found that only 26% of 2,422 respondents (aged 55 and over) had moved to a smaller home, and 15% did so because they were forced to.
The challenge with staying at home in retirement is that not everyone has enough savings to do so, but there’s a solution for that. In today’s article, we explain how to avoid downsizing and comfortably fund the retirement lifestyle you deserve in a home that you love.
What do I need to know about downsizing?
As with any financial decision, especially a financial decision involving the sale and purchase of a home, downsizing requires a lot of planning. It’s a significant life decision and you need to explore the options and make sure it is right for you.
So, ask yourself the following questions:
✓ Are you downsizing to improve your retirement finances?
✓ Do you want a smaller home to improve your lifestyle?
✓ What sort of house will suit you now and in the years ahead?
✓ What are the ‘must-have’ features of your new home and neighbourhood?
✓ Is there appropriate housing stock in the area you want to live?
✓ Can you find a new home that suits your lifestyle, budget and future needs?
Each of these decisions needs to be researched before taking any action; you don’t want to sell your family home and then not find the ideal replacement in your chosen area.
I don’t want to move. What’s the alternative to downsizing?
So you’ve decided that your family home is the best place to see out your retirement. However, you may not have a sufficient nest egg to fund 25-plus years of retirement life. The solution? Getting a reverse mortgage and using it as an alternative to downsizing.
A reverse mortgage is a loan specifically designed to meet the needs of retirees and enables you to access the equity built up in your home. It can be a good option if a lot of your wealth is tied up in the value of your home, but you want to enjoy your retirement years living there.
There are a number of ways you can use the home equity accessed through a reverse mortgage that will help you live a comfortable retirement while staying in your family home. These include:
- Increase your fortnightly or monthly income and improve your retirement lifestyle
- Improve your cash flow and relieve financial stress
- Create a contingency fund for those unexpected expenses
- Top up your super or other invested funds
- Renovate or modify your home to make it safe and comfortable for retirement
- Refinance a home loan or pay down debt
- Buy a new car
- Cover medical expenses
- Become Bank of Mum and Dad and give to your children or grandchildren when they need it most
- Choose your own in-home care service and tailor it to your needs
- Cover the costs of transitioning to residential aged care
How Nan & John used their reverse mortgage as an alternative to downsizing
Nan and John Poole love their home on the sunny Gold Coast, where they’ve lived for more than 22 years, and they always knew they didn’t want to move to a smaller home. However, they didn’t think their financial situation would ever allow them to retire, let alone age in place.
Using a reverse mortgage, they were able to refinance an existing home loan while significantly boosting their retirement income. The result? They can experience a comfortable retirement in a home they love.
Have a look at our Customer Testimonials and discover more stories like Nan and John’s.
Your home can be both the best place to live and the right way to fund your retirement. Use our free reverse mortgage calculator to discover how much you could borrow.
Want to learn more about downsizing? Download our Downsizing e-guide to learn more about how you can use a reverse mortgage as an alternative to downsizing and much more.
Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available on request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434. Australian Credit Licence 391876.
Download Our Free 'Downsizing' Guide
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