My parents and my oldest brother came to Australia as refugees in 1950, with one suitcase and £5 in their pocket. None of them could speak English. Mum and Dad had buried two sons in Europe, Dad had survived Auschwitz.
My dad was a Polish Jew, while my mother was born in Germany to a Jewish Polish father and a Catholic French mother, so she was no more welcome in Germany under Hitler’s reign than Dad was in Warsaw when World War II broke out.
There were only two rules for refugees coming to this country after the war: one was that you had to stay in Australia a minimum of two years and the other was that you had to get a job. Dad held down three jobs just to pay the rent and feed us, and he swore his first aim was to buy a house – to pay his own mortgage, not someone else’s.
To put roots down in this country and have the stability of a home was really important to Mum and Dad. But they also looked at it from a long-term standpoint of financial stability.
That was something they really drummed into me, so I’ve always tried to have a roof over my head that I was paying off, even though it was extremely tough at times. Yes, I remember when my mortgage interest rate went from 13 to 18 per cent!
The stability and security of property is especially important if you’re a freelancer, which I’ve been since 1990. I’ve never been in a position where I’ve had extra money to salary-sacrifice into superannuation.
And that’s the case for so many women my age and older, who’ve been behind the eight-ball on super from the beginning.
When I started working, there wasn’t any super. Some women didn’t work for an employer for long periods or at all because they were raising children. There wasn’t any maternity leave back then. In fact, you had to resign when you got pregnant!
Even today, most women still get paid far less than their male counterparts. And with more than 30 per cent of marriages in Australia ending in divorce, you have many women who end up with the family home after a divorce but no money to live on, making them asset-rich but cash-poor.
On top of that – and this is the case for men and women – there are so many professions, including my own, where interest in you declines or vanishes altogether as you age, so the work can come to a stop whether you like it or not.
Many people I know say, “Oh, I’ll worry about that when I have to”, and I think, my goodness! I’m single, I don’t have anyone who’s going to leave me any money, there’s no sugar daddy and never has been, so I’ve constantly had to think about how I’m going to fund what’s hopefully another 20-plus years or even 30 years of my life.
That’s probably because I remember my mother often saying to me very early in the piece, “Whatever you do in your life, make sure that you think about providing for your old age, because by the time you get to retirement, there’ll be very little money left in the government coffers.” And, of course, Mum was spot on as usual!
A Household Loan is a reverse mortgage offered by Household Capital, an innovative Australian company that specialises in helping retirees access the savings locked up in their home to improve their standard of living in retirement – without losing ownership of their property.
A Household Loan lets you use your property as security against a loan that doesn’t have to be repaid until you sell the property (although you can pay off the loan at any time with no penalty).
Your loan can be paid as a lump sum called a Household Loan or as a Home Income of fortnightly or monthly instalments, or both. If you have an existing mortgage, a Household Loan can be used to repay it, so freeing up the money you would’ve otherwise used to make mortgage repayments. That way you keep living in your home and increase the funds you have to enjoy a more comfortable retirement lifestyle.
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With all of that in mind, I’ve done things that have set me up for my retirement, and one of those was to make sure I always put money into property. I was also influenced to do this by a dear friend who was a fabulous mentor throughout my entire life. Her husband died of a heart attack when their children were very little, so she became a single mother when there was no support for women like her. She changed careers after studying nursing, started her own business and managed to keep paying off the family home and feed and clothe her children – as well as doing so many charitable things – all on her own.
She was very determined, as I have been in my life, to own a piece of Australia. But when she was in her mid-70s, the big, beautiful home that she loved so much suddenly needed a new roof. She didn’t have the money to get it fixed and no one was going to give a 75-year-old woman a bank loan, so she did her homework and obtained a reverse mortgage, which let her pay for the house’s upkeep and meant she didn’t have to sell her beloved home for a bargain price.
We were so lucky that she lived into her 90s, and it was wonderful that she could stay in her home, surrounded by her favourite knick-knacks! Her daughters, grandchildren and great-grand-children could all still come to stay and look after her that way, too.
The other great thing was that when she did sadly pass away and her children sold the house, the difference between the amount she borrowed with her reverse mortgage versus how much real estate prices had increased was incredible, so she’d ultimately left a legacy – not a lead weight – for her children.
Interestingly enough, she ended up making more money by staying in her house with a reverse mortgage than if she’d sold up and bought a smaller place elsewhere! And she didn’t have the stress of having to make repayments on the loan during her life.
After seeing my dear friend’s experience, I know in the back of my mind that if all of my ducks don’t line up, there is something like a reverse mortgage that I can call on now, too. I’m not going to be forced to sell.
It’s so important to have that security because you never know what’s going to happen in life. Maybe the roof needs replacing, the wiring needs redoing, or the air-conditioning packs it in, and if you don’t have a lot of super, you need something to draw on. What else are you going to do?
Frequently Asked Questions
Q: When can I apply for a reverse mortgage?
A: If you are 60 plus and a homeowner, you may be eligible for a reverse mortgage. Learn more about the options and eligibility requirements here.
Q: How much can I borrow with a reverse mortgage?
A: You may be able to borrow up to 50% of your property value, but this varies depending on your age and property value. Calculate how much you can borrow here.
Q: When do I need to repay a reverse mortgage?
A: Your reverse mortgage will need to be repaid when you sell your home or when all borrowers and nominated occupants have passed away. If all borrowers or nominated occupants move into aged care, the lender will also need to be informed and will reassess the loan every 2 years.
HOUSEHOLD CAPITAL INFO Important information. Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable, and terms and conditions apply (available upon request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434, Australian Credit Licence 391876. HOUSEHOLD CAPITAL™, the Star Device and Household Capital and the Star Device are trademarks of Household Capital Pty Ltd.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
Like Susie’s friend, you can access your home equity to enhance your retirement. Whether you’d like to make your home safe and comfy for retirement, need a new car or would sleep easier knowing you had a contingency fund to draw on, a reverse mortgage can improve your retirement funding and help you live the life you deserve.