4 Key Considerations When Using a Relocation Loan

May 22nd 2019 by Jason Mah

Financing Your Home Selling Your Home

Cover: article > 4 Key Considerations When Using a Relocation Loan

You’ve found the retirement village of your dreams and you can’t wait to move in, but it’s going to take months to sell your property. How do move in before the home is sold?

One common choice is to take a relocation loan while your home is on the market.

If you or your loved ones are considering a relocation loan to make the move to a retirement village, there are four key things to be aware of:

1. A relocation loan is essentially short-term bridging finance

A relocation loan can allow you to move into a retirement village while you're waiting for the sale of your existing home.

It’s like a bridging loan, but some relocation loans don’t require interest repayments until your existing home is sold, which can be important for retirees.

A relocation loan also does not need to be for the full price of your retirement village home.

Many retirees choose to borrow just enough to pay their deposit and entry fees to secure a place, with the balance of their new retirement home payable only on the sale of their current home.

As with taking out any loan, do not borrow more than you need to.

2. Advantages of relocation loans

The key advatanges of using a relocation loan are:

  • A relocation loan will allow you to secure your new home in a retirement village before your home is sold.
  • You can avoid the stress of trying to sell your home quickly, which could potentially result in getting a better price for your home.
  • You can gradually move your belongings over to your new home while your current property is being prepared for sale, assuming this does not disrupt any renovations or open houses.

3. Disadvantages of relocation loans

Simply put, a relocation loan means more debt. Several other key disadvantages to keep in mind are:

  • You’ll potentially be charged higher interest rates for a relocation loan than a standard home loan.
  • You’ll need to sell your home by a specific date because relocation loans are short-term, typically for periods of six or twelve months. This means you might have to drop your selling price significantly to sell it by the time you have to repay your relocation loan.
  • The lender may charge relocation loan application and/or valuation fees.
  • You must meet the loan provider’s normal lending requirements. If you don’t have enough equity in your current home you may not qualify.
  • If you still have a mortgage on your current home and your lender doesn’t offer bridging finance, you might need to change lenders. You could be charged exit fees if you do this.

4. The alternatives

There are other ways to finance your move to a retirement village besides using a relocation loan. We have them covered in "3 smart ways to fund your move to a retirement village".

Too much hassle?

Another option to consider is Sellable

Sellable can help you relocate seamlessly to a retirement village with the following added 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, home reversion scheme or reverse mortgage.
  • After you get paid, Sellable makes renovations and improvements to your property to increase your home’s 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. If your home is sold for more than your guaranteed price, Sellable will give you a further 75% of any upside. This ensures Sellable’s interests are aligned with yours.

If you’d like more information, or to talk about your situation, give us a call on 1300 722 910, visit sellable.com.au/retirement or send us a message at [email protected]


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.

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