Should You Sell Your Home To Fund Retirement?

Written By Andrew Ford

24 November 2017

Australian seniors need more money to ensure comfortable lifestyle during their retirement years, according to the latest Retirement Standard recently published by the Association of Superannuation Funds of Australia. Based on the industry benchmark, single retirees who own their home and are healthy will require $43,665 per year to achieve a comfortable lifestyle, while couples will require $59,971 per year.

Sadly, not all Australian seniors have managed to save enough to fund their retirement. According to another survey conducted by Mortgage Choice, three out of five Australians feel they will not have enough money to retire.

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Many seniors will rely on limited government pension, and may consider downsizing or renting and selling the family home to make ends meet.

While I am not averse to downsizing, as it can be a great option, before doing so to release funds in retirement there are some important considerations to be contemplated first.

Three Points to Consider Before Selling Your Home During Retirement

1. Pension Impact

The family home is usually exempt in the pension assets test. As a result, selling it to free up added cash to live on could lead to a reduced pension if it increases your assessable assets. Unless the excess proceeds of the sale will not be included in the assets test, remaining in your own home may be a more viable financial option.  

RELATED POST: Family home in the aged pension asset test?

2. The Loss of Future Capital Growth

If you are living in a major city like Sydney, Melbourne, or Brisbane, the long-term appreciation in value of the family home can be a significant source of future wealth. Assuming the price of your property continues to increase, maintaining your family home may provide tax-free capital growth that could exceed other forms of financial investment.

3. Once You Sell Your Home it’s Gone

Retirement is a major milestone in our lives, and it takes careful consideration to decide on  lifestyle goals for this period. Some retirees choose to downsize, and have a sea change or relocate to a retirement village. However, moving to a different location or cheaper house also means you may be leaving your community, social network, and a home filled with memories where you have welcomed your family and friends, and felt safe and secure.

How a Reverse Mortgage from Heartland Can Help

Instead of selling your own home and downsizing or renting, a reverse mortgage can be a great option to access the funds you need while staying in your own home.

With Heartland’s Reverse Mortgage, you can access the wealth in your property and use it to live the retirement you deserve. One of the main advantages of obtaining a Reverse Mortgage is that you will retain ownership of your own home.

Heartland’s product is also very flexible, and offers, in addition to a lump sum payment, an income plan through a regular advance that can provide you with regular funds that will supplement your other sources of income.

You can also set-up a cash reserve, so you can have funds available for your future needs such as emergency health care, holidays, home renovations, and help around the home.

You also don’t pay any interest on any undrawn amount, whether that is undrawn from the regular advance or cash reserve facility.

Taking a Reverse Mortgage also enables you to stay in your home for longer, while still providing you the option to sell and move or downsize in the future.

RELATED POST: Reverse Mortgage vs. downsizing – which is best?

When deciding to sell your home, or to take a Reverse Mortgage, there are important factors to consider. To help you with your decision, we encourage you consult your family, a financial adviser or mortgage broker who specializes in retirement planning, or call the Heartland Seniors Finance team on 1300 889 338. We are here to help you. 

Regards, Andrew



Information provided is accurate as at 24 November 2018 and may change from time to time


Andrew Ford, CEO, Heartland Seniors Finance

Andrew Ford is the CEO of Heartland Seniors Finance and has been with the Heartland group for over 15 years. He is passionate about reverse mortgages and the difference it can make to the lives of seniors.

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