Home equity could help grow retirement savings
Putting equity from the family home could help retirees fund expenses, improve their income, and provide support to their families, a new retirement funding provider has claimed.
Household Capital, which former senator and Minister for Superannuation Nick Sherry has put his weight behind as chair, yesterday entered the market with a new scheme that would grant loans to home owners to fund their retirements.
The offering would use a low interest rate loan to transfer a portion of owners’ house values into their superannuation funds of investment accounts, while providing them with guaranteed lifelong occupancy of their homes.
The loans would be charged a variable interest rate beginning at 5.9 per cent per annum, in addition to a 1.5 per cent establishment fee that could increase based on home size and loan length.
Founder and chief executive of Household Capital, Josh Funder, said at a media briefing yesterday that Australian retirees currently held $900 billion in “untapped” home equity, with approximately 80 per cent of retirees owning their own home.
Despite this, he said that the average retirees’ retirement savings were exhausted well before death, with increasing longevity seeing the average retiree’s super balance exhausted only 10-15 years after leaving the workforce.
Funder believed that using home equity to fund retirement could improve retirees’ living standards, assist baby boomers in supporting their families with loans before their deaths, fund transitions to aged care accommodation, and help maintain their houses.
AUTHOR
Hannah Wootton
Recommended for you
Insignia Financial has announced a board director will be stepping down next year after almost a decade amid a board refresh.
Zenith Investment Partners has appointed a Brisbane-based business development manager, who previously led Fitzpatrick Private Wealth Partners as a director and senior adviser.
Praemium has said it is open to investing in artificial intelligence “in a big way” as it believes it can transform the business and details how it is already being used by the firm.
Sequoia has shared its strategic initiatives for FY25, including organically increasing its licensee market share and restructuring its specialist investment arm.
