What is an Equity Release solution, and would it be right for me?

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If you are a homeowner over aged 60 plus and would like some extra funds to enjoy the retirement you deserve, then an equity release product could be right for you.

An equity release solution provides the ability to release some of the cash tied up in your home, without having to downsize. If you are asset-rich and cash poor, then you may be able to release a tax-free, lump sum payment, via an equity release provider.

There are two different types of equity release products available to homeowners: a loan (or reverse mortgage) option, or a debt free equity release option.

There are several reasons older Australians choose a debt free equity release solution.

Homesafe Wealth Release™ is the only debt free equity release solution for homeowners.

In 2020, 60 per cent of customers who have released the equity in their homes with Homesafe used the funds to pay off debt (including home loans and credit cards), 20 per cent used the funds for minor renovations or general home maintenance to the home and 10 per cent used the funds to gift to a family member.

Pamela and Tony, from Mount Waverley approached Homesafe to pay off their $90,000 interest only loan and $25,000 credit card debt.

"For us, debt free equity release was the answer. We were struggling to make the interest payments on our loan, and we can now save some money to do the work in the garden we have been putting off for years."

Initially, the couple thought that selling their home was the only option - but they love their home and their suburb, and they couldn't find anywhere they liked enough to make the move. That was when they looked into equity release.

"For us, the debt free equity release solution offered by Homesafe was the answer. We didn't want to replace one loan, with another."

They even ended up recommending the Homesafe product to their friends.

How does equity release generally work?

In Australia, equity release is available via a debt option (a reverse mortgage) or a debt free option (Homesafe). A reverse mortgage enables a homeowner to borrow against the equity in their home, with interest charges compounding into the future. The Homesafe option is a part sale property contract, where the homeowner can receive a lump sum payment in exchange for selling an agreed share of the future sale proceeds of their home.

Neither option requires the homeowner to make repayments and only when the homeowner decides to sell, or passes away, would the providers receive their entitlement.

Before deciding to proceed, a homeowner should make the necessary enquiries with Centrelink or seek financial advice to ensure they are making an informed decision for their financial future.

How can I explore my options in the current Covid-19 environment?

Despite the uncertain conditions we are currently facing, many homeowners are continuing to look at their options and whether equity release is the right choice for them, either now or in the future.

The team at Homesafe offer initial personalised service over the phone, by video call with a Homesafe Consultant or a face-to-face appointment in NSW, depending on government restrictions.

For more information on how Homesafe has helped Senior homeowners to payout debt for over 15 years, contact Homesafe on 1300 307 059 or visit www.homesafe.com.au.

*Terms, conditions, and eligibility criteria apply. Homesafe Wealth Release™ is available in 90% of eligible postcodes in Melbourne & Sydney.

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