With the cost of residential property at all-time highs, it can be tempting for asset-rich and cash-poor retirees to look at ways of unlocking some of the money they have tied up in their home to help pay for their retirement expenses, particularly if their super account is small.
One solution to this dilemma can be to take out a reverse mortgage, which works a little like a home loan in reverse. These loan products can provide either, a lump sum for a major expense like necessary home renovations, or an income stream to top up your regular income.
While they sound like an easy solution, reverse mortgages also have a down side. The reverse mortgage debt can quickly snowball, leaving you with less equity in your home for longer-term expenses such as moving into a retirement village or aged care, so careful thought is needed before signing up.