In Everyday money on Monday 11st Jul, 2022

Think smarter: a powerful way to fund your big retirement ambitions

Jul 11, 2022
You’ve worked hard to save money by paying off your home. Why not enjoy those savings? Image source: Getty

You’re working hard, raising a family, paying off a mortgage. The days and years pass quickly.

And then suddenly, you find yourself retired. Where did that time go?

Now, you’ve got time to do the things you’ve always dreamed of. It might be exploring Europe or travelling around Australia for six months. Perhaps you’ve always liked the idea of restoring a classic car. If you’ve got grandkids living interstate, no doubt you’d like to spend more time with them.

The question is, with the cost of living rising all the time, how will you pay for it?

The million-dollar myth

You might have read about people retiring with million-dollar superannuation payouts. Here’s the truth – most people retiring today have less than $200,000 in super.

The Superannuation Guarantee system is helping younger people build a sizeable account balance, but for many boomers, it came too late.

And self-employed people, as well as those who spent time out of the workforce raising kids, often don’t have much in super at all.

If you’ve missed the boat when it comes to having a big super balance, that doesn’t mean you have to give up on your retirement dreams.

More than 75% of retirees own their home outright. Others are well on the way to paying it off. With house prices reaching record levels across Australia, your home could be the key to your retirement plans.

You’ve worked hard to save money by paying off your home. Why not enjoy those savings? One way you can do that is by accessing your locked-up capital through a reverse mortgage.

A reverse what?

A reverse mortgage is a loan – it could be a lump sum payment or series of payments – secured against the value of your home.

Unlike a traditional home loan, there are no regular payments. Instead, the interest is capitalised (added back to the loan account) which means the loan balance grows over time.

The loan can be repaid at any time, but it doesn’t need to repaid until you move out of your home.

It’s a flexible way of using the savings locked up in your home to pay for the retirement lifestyle you deserve.

A reverse mortgage can be a great way to repay the balance of your home loan when you retire. You might want to put aside a nest egg for aged care needs later in life. Or perhaps the outback is calling, and it’s time to go looking for a caravan.

You might not have heard much about reverse mortgages. But a new company, Boomer Home Loans, has introduced range of flexible products specifically designed to help over-55 homeowners live well in retirement.

Let’s look at an example.

John wants to wind things down

John is 63 and no longer wants to work full time. His home’s valued at $600,000, but he still has $100,000 owing on the mortgage. John’s a few years shy of Age Pension age, and even though he plans to work part time, he’s worried he won’t be able to afford his loan repayments, and enjoy the lifestyle he wants.

How Boomer can help

John can convert his bank home loan into Boomer Reverse (Boomer’s reverse mortgage loan). This means he doesn’t need to make any further regular loan payments and he’ll be able to enjoy his retirement lifestyle supported by his part-time income.

Even though John is converting his home loan to a reverse mortgage, in 15 years’ time when John is 78, based on an annual increase of 2.5% of the value of John’s home, Boomer estimates John will retain 74% of the equity in his home. John’s also free to make repayments to the loan, which means he’ll pay less interest overall.

Of course, John retains ownership of his home, and he can remain there as long as he likes. The loan will be repaid when the property is eventually sold.

Cars, boats, caravans

A Boomer reverse mortgage doesn’t have to be used to repay your home loan. It’s your money after all, and it’s up to you what to do with it.

You could draw on your home equity to renovate your home, upgrade your car, or head to Europe on a holiday. It’s your retirement, so why not make the most of it?

What’s my next step?

Boomer Home Loans is a new company, but there’s a lot of knowledge behind the scenes. The team has decades of experience across banking, accounting, business and financial services.

Boomer’s loans have been specifically designed to help retirees live better lives. With an Australian-based call centre, you’ll get fast, friendly service to help you navigate your retirement options.

Why not find out how your home could be the key to your retirement dreams?

You can make a start by calling 1800 552 100, or visiting boomerhomeloans.com.au

Information in this article is general only and does not take into account your personal circumstances.  You should seek professional advice before making any financial decision.  All Boomer loans are subject to eligibility criteria and have their own fees, interest rates, terms and conditions which change from time to time. Boomer Home Loans Pty Ltd Australian Credit Licence 532798.

There’s a new Sun Rising for Aussies over 55.

Created by Australians for Australians, Boomer Home Loans is the first specialist lender for Aussies over 55. And we’re here to listen and help you make the most of what you’ve got so you can continue to live well now and throughout your retirement years.

Find out more

What lifestyle changes would you make if you could improve your retirement funding?

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