Q. My date of birth is October 28, 1953, and I’m 65 years old. I have a $200,000 mortgage on my villa in Swansea and hope to make $200,000 on the sale of my unit in Wollongong, which I’m in the process of selling. I work casually three to five days a week at a rate of $34 per hour and I have no other funds, superannuation or otherwise. My assets are a $21,000 care and some furniture. If I use the proceeds from the sale of my unit to pay off the mortgage on my villa, I’d have no funds for emergencies. Is it possible to ‘sit’ the $200,000 on the mortgage but redraw it back for living on when I retire, without impacting what I may receive from the Age Pension? (I don’t intend to retire soon as I like my job.) Or should I consider selling my villa to buy a home in an over-55s park, where the weekly rent would be $125-$150 a week, and keep the remaining $50,000 to $75,000 left over from purchasing the park home in a super fund or savings account.
A. At your age I would be wary of repaying the loan because it may be very difficult to redraw it if you did. The perfect solution would be to place the funds in an offset account attached to the loan account, then the interest on the loan would be negated by the money in the offset account. The funds would then be available on call to use as you wish. This, of course, assumes that the bank you hold your mortgage with offers that facility on that loan account.
If this strategy is not possible, just simply deposit the funds in a separate bank account. Based on the information you have given, I doubt if your Centrelink payment would be affected.
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