Reverse Mortgage to Solve Superannuation Woes?

09 May 2016

As we all know, the core objective of superannuation in Australia is to provide income in retirement to substitute or supplement the Age Pension. However, superannuation was only made mandatory for all Australian workers in 1992. Hence, if you are a baby boomer or your working years mostly happened during the 50’s, 60’s or 70’s, then there’s a lower chance that you have accumulated enough funds in your super.

(Related Article: Baby boomers embrace Reverse Mortgage for retirement funding)

The cost of pursuing a comfortable life in Australia is rising, and seniors often have to pay for added medical expenses. In a survey conducted by “Your Life Choices” magazine, health is a major concern for older Australians with 86% and 84% respectively ranking as essential the need for availability of dental care and affordable medical insurance.

In addition, 85% of the respondents also support the increase of age pension in order to meet the standard set by the Association of Superannuation Funds of Australia (ASFA). The latest standard released shows that couples who want to live a comfortable life in retirement should spend about $58,364 a year. This is a bit higher compared to $33,717 combined entitlements for couples who are eligible for full age pension.

How Can Reverse Mortgage Supplement Superannuation Funds?

Here at Heartland, many of our customers use a Reverse Mortgage to pay for their living costs or finance their medical expenses. If you own your home, you may have equity available that can be used to live a better retirement. Unlike a regular home equity loan, where you will receive a lump sum cash, Heartland offers a Reverse Mortgage income plan, which will provide you money every month over 5 or 10 years.

We’re proud of this innovation in home equity release, because we know it can help borrowers save money.

Example: a  loan amount of $100,000 on a current rate of 6.5% could have $52,000 lower interest charges over a 10-year period if the funds are drawn gradually on a monthly basis, rather than as a lump sum at the start of the loan (assumes no additional repayments or further advance during the term)*.

Heartland also provides flexible cash flow. In addition to our Regular Advance option, Heartland’s Cash Reserve facility enable you to put aside some funds for future needs, whether that be renovations, travel, health care, to take the stress out of bills or those unexpected expenses. It is quick and easy to access and you do not pay interest on the undrawn amount.

And on top if it all, there is no need to move out from your home. A Reverse Mortgage allows you to retain ownership of your home, so you can live in comfort during your retirement.

What can you do?

If your superannuation balance is running low or you are concerned it’s not enough to help you live a comfortable life in retirement, you might be surprised by what’s possible with a Reverse Mortgage. Heartland has a comprehensive guide that you can download for FREE here, or you can call our Reverse Mortgage experts at 1300 889 338 for a chat.



*IMPORTANT: The example given is for illustrative purposes only and assumes a fixed interest rate of 6.50%p.a. compounded monthly, with no fees or charges applying and no repayments being made. The interest rate used is an example for illustrative purposes only. Different interest rates may apply. Please contact Heartland Seniors Finance for current interest rates. Lending criteria, terms and conditions, fees and charges apply. Different loan amounts, interest rates, terms and conditions, and fees and charges, will result in different repayment amounts. 

Information provided is accurate as at 09 May 2016 and may change from time to time