More attention is being paid to Housing Wealth to assist Asset Rich, Cashflow Poor retirees in the USA.
Equity home loans for retirees has a mixed history in both the US and Australia, however there are tweaks being made to the program that are generating interest from professionals.
The Federal Government is now expanding their Pension Home Loan Scheme from 1 July to offer the program to those that exceed the social security means test.
It provides an income stream on a fortnightly basis and can pay up to 150% of the relevant maximum pension rate (even though the person is not on the aged pension).
All pensioners and self-funded retirees who do not meet either or both of the means tests can join the scheme.
Who Can Benefit?
It doesn’t suit everybody, but for retirees that have most of their wealth tied in their home, or whose investments may be tied up in illiquid investments such as property, or cashflow is limited this can be of interest. There’s no doubt that standard home loans can be tricky when people are retired.
Rather than sell the home to unlock this cashflow, the expanded scheme is a less expensive form of reverse mortgage.
This benefits individuals by allowing Australians to live longer at home, receive additional cashflow to pay for home support services, home modifications or for residential aged care and retain their aged pension as well.
Speak to our in-house mortgage adviser Peter Taniane on 8539-7233 whom can explain these loans and other options for you further.