Ask Paul: I'm 77, how can I access equity in my home?

Dear Paul,

I'm 77 years old and looking to release some equity in my home, which is worth about  $950,000.

I'm looking to access $50,000-$100,000. What's my best option? - Frank

Well, Frank, I would argue that the best reverse mortgage around is Services Australia's Home Equity Access Scheme, which is run out of Centrelink.

The current interest rate on the loan balance is a fantastic 3.95%.

But you may not qualify as you must be eligible for, or receiving, the age pension or other government support. The next issue is that it pays a maximum of 150% of the age pension.

Apart from this, you need to look at the private sector. Here I think you will find that rates are around 9%. This is pretty expensive money.

It will be no problem at your age, as the owner of a valuable home, to get a loan of $50,000 to $100,000. But do you need a lump sum? Would a regular payment, such as one provided by Centrelink, be available to you?

Sure, you could pay a high rate of interest and get this money through a loan.

But let's think laterally. Do you have family members who might be able to lend you this money at a rate closer to a term deposit, say, around 5%. A solicitor could easily document such a loan, ensuring it is all very secure.

Equally, do you need it upfront or a specific amount each year?

I'd take a look at a few reverse mortgages to help you decide. But please don't sign up to a private sector lender without seeing your solicitor.

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