Moving to a retirement village is something many of us will consider as we age. Increased opportunities for autonomy, social connection, healthy living and purpose are all aspects of village life from which residents can benefit greatly.
Making the move is a big decision, and it is important to consider all aspects of the process before moving. It is also vital to ensure that it will be a good fit for you financially, and you should always seek independent, professional advice before doing so.
When it comes to funding your move into a retirement village, there are several options you can consider. Here are three smart ways to do it:
1. Sell your existing property
Downsizing and moving to a retirement village is the perfect option for many residents. Selling an existing property which is owned outright or which has a large amount of equity invested in it is a great way to unlock funds. This can help with effective planning for both upfront and ongoing costs.
Be aware, though, that it can sometimes take several months to sell a property, meaning you might have a cash shortfall when you need to pay upfront costs to secure your new home.
One way that you can get around that is to take out a relocation loan to tide you over, which involves a loan application and paying interest.
You can also make renovations to your home, so you can get a higher price when you sell.
2. Get a reverse mortgage
A reverse mortgage allows you to borrow against the equity you have in your home, but you don’t have to make repayments. Instead, the interest charged is continuously added on top of your outstanding loan principal.
While it is a good way to get cash for your property, you should seek professional financial advice if you’re considering a reverse mortgage. The interest compounds and hence increasingly erodes the equity value in your home, with the interest payments also getting larger over time as your outstanding loan principal grows.
3. Use a home reversion scheme
A home reversion scheme allows you to sell a proportion of the equity you have in your home. But it’s not a loan like a reverse mortgage. Instead, with a home reversion, you receive a discounted lump sum in return for a percentage of the value of your home.
For example, you might revert 50% of the value of your home. There are no additional fees like the interest charged on a reverse mortgage, though a discount would have already been applied upfront.
A home reversion will free up the funds you might need to cover your retirement village costs, but you’ll also lose a proportion of any future increase in the value of your home.
And another option - using Sellable!
If you would like a hassle-free option to help you afford your move into a retirement village, the Sellable option might be suitable for you.
Using Sellable, you can get the following benefits:
- Sellable will pay you an upfront guaranteed price for your home based on an independent valuation as soon as you want to move out. This removes the need for a relocation loan, reverse mortgage or home reversion.
- After you get paid, Sellable makes renovations and improvements to your property to increase its value. This saves you the time, hassle and money needed to organise it yourself.
- Sellable then finds the best agent to sell it on your behalf. Furthermore, if your home is sold for more than your guaranteed price, Sellable will give you an additional 75% of any upside. This ensures that our interests are aligned with yours towards getting the best possible outcome.
This article was written in partnership with RetireAustralia
RetireAustralia is the leading private owner, operator and developer of retirement villages in Australia. Founded in 2006, RetireAustralia operates 27 retirement villages with over 5,100 villas and apartments across New South Wales, Queensland and South Australia, and offers a wide variety of living, service and lifestyle options to suit a diverse range of needs.