What is a home equity release?
A home equity release gives you the option to use some of the value of your home to pay for your aged care, among other things.
Depending on your circumstances, a home equity release could be a suitable option for you. Just like any other big financial decision, make sure you get independent financial advice before you decide.
Keep reading to find out more or get in touch with us if you have any questions, and we'll be happy to help.
How does a home equity release work?
'Home equity release' is a generic term for a financial product which lets you use some of the value of your home. These aren't just used to pay for aged care, anyone can use their home equity to pay for any number of things.
A home equity release can take many different forms, so you need to be careful about the provider you choose, and always get professional advice.
One type of home equity release is a reverse mortgage. These use the equity in your home as security for a loan, and can end up being very expensive due to the compounding interest involved. You can read more about the risks of reverse mortgages on ASIC's MoneySmart website.
Using a reverse mortgage isn't your only option if you're considering using the equity in your home to pay for your aged care. You can choose to sell a portion of your home equity instead of using it to secure a loan.
Homesafe Wealth Release
The home equity release product which we recommend is Homesafe Wealth Release. Absolute Care & Health is not affiliated with Homesafe in any way, we have simply done a lot of research on the different options which may be helpful for our clients.
Homesafe is the only home equity release product we recommend to our clients because of the significant safeguards in place to make sure you and your partner can continue living in your home until you decide to sell or until you have both passed away.
How does it work?
You sell a portion of the equity in your home. This is a percentage, such as 30 per cent, of the future sale proceeds when you decide to sell your home or it passes to your estate.
In exchange for a portion of the future sale proceeds of your home, you receive an upfront cash amount which is agreed on in the contract.
When your home is sold, you or your estate will receive the portion you of the proceeds you didn't sell. Homesafe is never entitled to more of the proceeds than the agreed per cent.
What's the difference between a reverse mortgage and Homesafe Wealth Release?
Home equity releases can be confusing, here are the key differences between a Homesafe Wealth Release and a reverse mortgage:
- A Homesafe Wealth Release is not a loan
- There is no compounding interest
- Homesafe cannot receive more than the agreed on portion
A Homesafe Wealth Release is currently the only financial product of its kind available in Australia. You can read more about their services on the Homesafe website.
Who is a home equity release good for?
It's very common for people to sell their home so they can afford to move into a retirement village or residential aged care facility. But selling your home won't help if you want to continue living there.
If you want to receive aged care in your home but don't have enough income, using a home equity release may be suitable for you. It can help you pay for the type of care you want since your home is usually your most valuable asset.
Just like any other big decision, make sure you consider all your options and get independent professional advice before you make up your mind.
Get the ball rolling
If you're interested in using a home equity release or Homesafe Wealth Release to pay for your in-home aged care, we can help you get the ball rolling.
At Absolute Care & Health, we are specialists in providing in-home care that's perfectly suited to you. We know one size doesn't fit all, and we take the time to make sure you get the right kind of care.
Get in touch with us and we can answer all your questions about home equity releases and our in-home care services. Call us on 03 9827 8899 for a friendly chat.
Absolute Care & Health on 29 June 2020
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