Life beyond 60 can be simultaneously peaceful and stressful. The thing about life is that it's not entirely predictable. Sometimes you might have to deal with unexpected expenses. As someone that's over 60, this can put a significant dent in your finances.
Luckily, as a homeowner in Australia, there are options available to help you manage and handle sudden expenses—whether it's medical, home-related, personal, or more.
You can tap into your home equity and turn it into cash you can use for whatever purpose you need. Of course, first, it’s important to remember that it would be best to move forward with the guidance of a mortgage broker to ensure you're taking the proper steps to improve your situation or solve your problems.
That said, here's what you need to know to understand home equity releases and reverse mortgages.
Home Equity Release
A home equity release is where you give some equity as part of your home to an equity release provider, and in turn, that provider gives you a sum of money.
It's a way to raise cash in case of an emergency, and in some cases, it might be the only option you have to solve a problem or manage a sudden expense.
How Does it Work?
The home equity release process is an exchange of value. You give value in the form of equity from your home, and the product provider offers value in the form of a lump sum of money.
You don't even have to leave your home to take advantage of a home equity release product. A home equity release provider might come over to your home and carry out the transaction there.
This is a very convenient way of doing things as it can allow you to stay in the comfort of your own home.
There are a variety of products available as part of a home equity release. These include:
- 2nd mortgages
- fixed-rate terms
- variable-rate terms
A reverse mortgage is another name for a home equity release. They both refer to the same thing: a way to tap into your home and turn it into cash. The main difference between a reverse mortgage and a home equity release is that reverse mortgages are specifically meant for those over 65.
Reverse mortgages are mainly geared towards those who need funds to live on, as they can often be used as a pension plan.
How Does it Work?
As we mentioned above, a reverse mortgage works by tapping into your home and creating a line of credit. The line of credit will be used to pay for whatever expenses you prefer.
The money for this line of credit comes from your home, and you aren't required to make regular repayments. At the end of the day, the amount you have advanced from the line of credit is added to your home's value.
How to Get Started?
The first thing you need to do is get in touch with a home equity release or reverse mortgage provider. You can do this by calling up a provider or visiting their website to get started.
What you'll want to do at this point is to get in touch with a financial adviser. This is especially true if you are in the process of dealing with economic issues that are causing you anxiety.
A financial adviser can help you assess your situation, provide you with the best possible solutions, and then create a unique financial plan for you.
There are a lot of things to consider when it comes to life after 60. This is something that all of us need to be aware of, and we need to be prepared for. The key to this is taking the time to plan and prepare.
Getting in touch with a mortgage broker and looking into a home equity release will not just provide you with peace of mind and security. It will also provide you with a means of accessing funds in case of an emergency or other financial problems.
Here at Wealthy You, we want to help. We are an Australian mortgage company based in Sydney. We provide our clients with the best service and advice to help them achieve their dream home. Contact us today and discuss with any of our mortgage brokers to get started on your journey!