Three ways to release home equity

That we are living longer is a great reflection of Australia’s improving living standards, yet there is also a cost.

Living longer, when combined with insufficient retirement savings, high living costs and low-interest rates presents a range of challenges for Australian retirees.

Increasing numbers of Australians are choosing to unlock the equity in their home to assist fund their retirement.

With our senior citizens living longer and healthier lives, they have every right to enjoy an active and fulfilling retirement.

Yet a lot of Australians are not adequately planning for life after work, and find themselves in the difficult financial position of not having sufficient savings to fund 20 years, let alone a possible 30 years of retirement.

Another challenge facing our senior citizens is the growing waitlist for government-funded in-home care.   In early 2021, Australia had almost 100,000 elderly people on the waiting list for home care.

Retirees also currently face historically low-interest rates, which makes it hard for them to earn money from their savings.

Below are three options for funding retirement from the equity in your home:

1. Downsizing
2. Pension Loan Scheme
3. Equity Release

Downsizing Your Main Residence

When retirement arrives, downsizing to a smaller home that requires less ongoing maintenance is one way to release home equity, yet this is a big decision that can cause significant disruption and dislocation, taking you away from your coveted household memories and familiar communities.

For this and other reasons, downsizing your home is not a popular choice, despite the government encouraging this outcome with incentives.

Pension Loans Scheme (PLS)

Another option for releasing home equity is the Pensions Loans Scheme (PLS) administered by Centrelink and is available to all Australian homeowners who receive the age pension.
The government draws on the recipient's home equity through this scheme to provide a regular income in addition to the Age Pension.

Yet it falls short of providing capital when required for other aged care needs such as house renovations or dental needs. If you are receiving asset hardship provision payments,  it is not possible to get the PLS at the same time.

Home Equity Release

Home equity release is a popular choice for seniors who prefer to live in their own home as they age.

There is an estimated $1 trillion of accumulated savings in home equity in Australia, which is a genuine and life empowering source of retirement funds.

A Household Loan enables retirees to live with the dignity that they deserve as they live longer.

Try our free home equity calculator and see how much you could access.