UNLOCK THE VALUE IN YOUR HOME
Using the money tied up in the family home, which is often the biggest asset for Australians, can provide age pensioners and self-funded retirees income for retirement.
Around 1.9 million age pensioners own property. The 960,000 pensioners who are renters are under huge financial pressure, with rents rising much higher than indexed rental assistance.
With prices in capital cities averaging $1 million for houses or $597,000 for units, there is plenty of capital to unlock. In Sydney, the average price for a house is $1.7 million and $713,000 for a unit. In Melbourne, houses average $1.18 million and units $585,000.
There are several ways to free up capital in your home. One strategy is to downsize and move to cheaper housing, unlocking some of the value. Another is to take out a reverse mortgage, where you borrow against the value of your home.
Rise Wealth’s Peter Humble says its capital-gains-tax-free nature incentivises Australians to store a great deal of their wealth in the family home. Being exempt from the assets test is attractive, too.
“The only problem is that they can’t sell part of it to buy bread and milk,” says Humble.
Retirees need to think of property as an asset – part of the pool of assets to be used in retirement, says Tim Wedd, executive director at Crystal Wealth Partners.
