How a reverse mortgage could help fund your dream retirement goals

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Living the dream. It's a line often bandied around, many times in jest during day-to-day life when you're enjoying a moment of bliss.

Perfect morning coffee from your favourite cafe? Livin' the dream. Enjoying that first cold beer after mowing the lawns on a hot day? Livin' the dream.

Ultimately, one of life's big doozies of dreams is the one about a retirement that's financially comfortable enough to spend ticking of all those goals on our to-do and bucket lists.

Those retirement goals will be different for everyone. It could be a tree or sea change, renovations to make your current home more liveable, that new car (maybe an EV to reduce fuel costs), and some holidays away whenever and wherever you like.

Unfortunately, for many this blissful retirement remains a dream with many people living their senior years under financial stress.

However, one option gaining increasing interest as a way to help people fund their retirement is the smart use of a reverse mortgage.

Australian retirees own more than $1 trillion in home equity. With a reverse mortgage, some of that equity can be released and put to work at a time when homeowners need it.

"Many retirees may be asset rich because of the value of their home but at the same time struggling to pay everyday expenses, particularly those people who are relying on a pension to fund their retirement," said Sharon Yardley, Head of Operations at Heartland, Australia's leading provider of reverse mortgages.

"But a reverse mortgage means they may be able to tap into the wealth built up in their home that they've worked hard through their lives to pay for. They can use it to achieve their retirement goals."

For Melbourne's James and Mary*, tapping into the benefits of a reverse mortgage allowed them to fulfill their dream of retiring to coastal New South Wales.

The couple's plan almost looked doomed when disappointingly their Melbourne apartment sold under the expected price. They'd also underestimated the cost involved in moving interstate.

It left them with a dilemma: spend most of their resources, including their super, to buy the house they wanted in their dream location but then rely on the pension to live on, or settle for a smaller property without the amenities and lifestyle they hoped for.

Having already researched the benefits of reverse mortgages before the sale of their home, they decided to contact Heartland to investigate their options.

They discovered they could use a reverse mortgage to extend their property purchasing power if needed so they could buy their dream property and also have enough resources to fund future needs.

The house they decided to buy was $100,000 over their budget so they used a Heartland Reverse Mortgage to cover the extra cost as well as top up their income and keep funds aside in a cash reserve facility for future needs.

Five years later, James and Mary's new property had almost doubled in value and these days they are well and truly living their retirement dream.

"We find ourselves with increased equity, living in a lovely home of our choice, five minutes from the beach in coastal NSW, and with the confidence that our reverse mortgage will continue to support our lifestyle," James said.

James said that without Heartland the couple would have purchased a lower-priced property and missed the opportunity to spend their retirement as they wished.

"Yes, we wouldn't have any 'loans' with the lower-priced option but we would have had less equity and wouldn't have had the pleasure of living in our nicer home," James said.

"By now, with the lower-priced option, we would have eaten away most of our super and savings."

One of the appealing benefits of a reverse mortgage is its flexibility.

"Homeowners could draw down equity as a regular income, a cash reserve like a line of credit, a lump sum or a combination of all three," Ms Yardley said.

"And the homeowner is not required to make any repayments until the end of the loan, although they can be made at any time. Interest compounds over time, and the debt is repaid from the future sale of the property."

James and Mary, whose current outstanding loan is $75,000 with another $38,000 still available to them to request, said using a reverse mortgage had delivered a great lifestyle and peace of mind.

"It's all good and well having a million dollar home but not when you're living off the pension where you can only just get by," James said.

"Your home equity is yours to spend, you can control where you want to live," he said. "I would recommend a reverse mortgage to anyone who wants to live a better retirement."

Heartland has helped over 25,000 Australians release $1.8 billion of equity from their homes to fund a more comfortable retirement with its award-winning reverse mortgage. To find out more download your free Reverse Mortgage Guide.

Every situation is different - this information has been prepared without taking into account your needs, objectives, or financial situation. If you are considering a reverse mortgage, we encourage you to understand how it may affect your personal circumstances - talk to friends and family, speak to professionals, and use the resources and tools Heartland has available.