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Home Equity Loan For Seniors

Equity Release Benefits

Enjoy Your Golden Years with Home Equity Loan For Seniors

Are you over 55, own your own home, but struggling with your finances? If you are dreaming of a more comfortable retirement, releasing equity from your home may be the easiest and simplest option.

What is Home Equity?

Your home equity is the difference between your home’s market value, and the balance of any debt that you owe on a mortgage. There is a good chance that you have built up some equity in your house, especially if you've had it for a few years. Taking advantage of your home equity can provide a good retirement strategy. The best part is that it will usually not affect Age Pension entitlements, and you continue to live in your own home. 

Types of Senior’s Home Equity Release

A home equity loan allows you to take a loan against the equity in your property.

There are a few options when it comes to leveraging your home’s equity. Ways to access equity in your home include Reverse Mortgage, Pension Loan Schemes (PLS), or home reversion schemes.

You may also have the option of selling or downsizing your home to access funds.

So, what are the different ways senior borrowers can release home equity?

  • Selling your home and downsizing: Selling your home or downsizing could free up money to pay off your mortgage, invest or spend. A smaller home comes with less maintenance, lower insurance and cheaper utility bills.
  • Reverse Mortgage: Reverse mortgage uses the equity in your home as security to provide you with a loan. You will only have to pay off the loan plus interest and fees when you sell the house or die, whichever occurs first. There is flexibility to access funds and to make repayments.
  • Pension Loans Scheme (PLS): The Services Australia and the Department of Veterans' Affairs lets senior borrowers take a non-taxable Pension Loans Scheme (PLS) from the Government. This fortnightly loan is secured against your property that allows both pensioners and self-funded retirees to receive up to 150% of your Age Pension entitlement.
  • Home Reversion Scheme: Here, you sell off part of the equity or, in other words, you sell off a share of the future value of the home in exchange for receiving a discounted lump sum amount. However, you can continue living in your home. Eventually, when you sell the house, the home reversion scheme agent receives the value of the equity at current market rates.

What can you use your home equity loan for?

The key reasons for releasing home equity include:

Home Renovations

You can use a home equity loan to finance your home improvements. Home renovations increase the value of a property; this is a real win-win situation as it can help increase the value of your property which leads to more equity.

Debt Consolidation

Having enough equity in your home allows you to consolidate all of your debt into one large payment instead of having it split up into smaller payments. Besides saving on interest rates, it simplifies your financial obligations.

New Car

If you are looking to buy a new car, then, instead of the conventional choice of financing the car using an auto loan, you may be able to take out a home equity loan.

Travel

A home equity loan for seniors is also a potential way to fund your vacation.

Living Expenses

You can access the equity in your home to fund a range of personal expenses, including education, wedding, or for emergency situations.

Find out how much equity you have

Senior First can help you to find out how much equity you have in your home, and how you might be able to use it for your needs

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