Equity release solutions are an essential strategy against the rise in the number of Australians using their superannuation to pay off their mortgage, according to equity release provider Homesafe Solutions.
Following a recent Australian Bureau of Statistics survey, which found the number of Australians aged 55 to 64 still paying off their mortgage had increased from 14 per cent to 47 per cent in 26 years, Homesafe Solutions chief operating officer Dianne Shepherd said the higher number of Australians tempted to use their super to eliminate their mortgage debt was a concern.
“This issue highlights the need for more clarity on alternative strategies to pay the mortgage aside from raiding the hard-earned superannuation nest egg,” Shepherd said.
“Using superannuation to pay off the mortgage may diminish lifestyle in retirement as people may then be relying solely on the age pension.”
She noted releasing equity in the family home was an option that would allow retirees to ease their mortgage commitments and urged those considering an equity release solution to ensure it did not land them in further debt.
“It’s important any equity release solution is debt-free when paying off a mortgage, otherwise you end up chasing your tail with debt,” she said.
She added the high number of over-55s facing escalating mortgage debt meant more Australians would benefit from seeing the family home as a “fourth pillar” of the retirement income system.
“This would allow more Australians to ‘age in place’ without being hampered by excessive debts such as outstanding mortgages,” she said.
“It’s vital the wider ageing population is aware of all their options and can access the stored wealth in their homes when they need it most.”
Fractional property investment firm Domacom recently launched an equity release product aimed at seniors over the age of 60 looking to release equity in their home.
In March, specialist funding provider Household Capital introduced an equity release offering catering to individuals without adequate savings to fund their retirement.