Ask Paul: I'm scared I'll have to sell my home

Dear Paul,

I am in my mid-40s with a house that I own in one of our capital cities.

I have a mortgage of $250,000, superannuation of $110,000 and a $25,000 share portfolio.

I have recently had to stop work because of a disability and I have now started to struggle financially for the first time because of this.

I do not want to sell my home, and my personal possessions are not worth anything, really, if I were to sell them.

I am thinking about renting out a room in my house and doing some pet-sitting, which should help to bring more money in at various times.

Do you have any advice on how I can build upon what I already have and help to create a better financial future for myself? Struggling financially was not part of the original plan for myself.

Thank you in advance for any help that you can provide. - Kris

I am really sorry to hear that disability has meant you can no longer work, Kris, and that you are now struggling financially.

We are in complete agreement that you should have a capital city home. Your idea of renting a room and pet-sitting is far preferable to losing your home, but the starting point is to ensure you have any benefits due to you from your disability.

If you have done that, then the next question is about a downsize.

In particular, with your disability would it make sense to downsize to a smaller home or apartment that is best suited to your needs now and in the future?

This, of course, would free up tax-free gains from the sale of your home. A fair bit of research will be required; you'd be up for marketing costs and agent fees, plus stamp duty and other costs, in buying a smaller home.

Assuming your current home is the right property for you, renting out a room is certainly one option, as is pet-sitting.

This may be a step too far for you, but with the strong preference these days to have pets minded at home, once you have tried pet-sitting, I wonder if it is worth considering what a few people I know are doing.

For one reason or another, often due to health, they are permanently pet-sitting in other people's homes while renting their own property until their mortgage is paid off.

Clearly, there are many personal issues at play here and I would not be leaping into anything before trying renting a room or pet-sitting.

But I really would like you to research downsizing into a home you can own with no mortgage and some spare cash.

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