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July 25, 2026 — 5:01am
There are times in your life – and possibly through different stages of your life – when your money requirements are larger than your income. I don’t mean a straight imbalance between your salary and your expenses.
I’m talking about big ticket things like the need to renovate, replace a car (without an expensive personal loan), maybe pay for kids’ education last minute. Or it’s a retirement funding shortfall that’s making life, well, miserable.
Perhaps, increasingly commonly, you want to financially help adult children when they need it most. Thanks to the huge rise in property prices benefiting the older generation, the so-called living inheritance to get the next generation into housing is growing in popularity.
No matter why, there are options at every age to get out the equity you might think is locked in your property.
Until your mid-50s
Mortgage refinance: Often – and particularly after three rate rises this year – a mortgage refinance is about cutting your monthly repayments. But sometimes it is about getting a larger loan.
And it’s even possible that, with the combination of both, you could extract equity without increasing your minimum repayment. This option is available earliest – just as soon as you have built enough equity to withdraw and maintain the maximum loan-to-value ratio.
For asset rich but cash poor Aussies, at every age there are options.
But it’s also an opportunity that evaporates as your retirement approaches, as lenders don’t love retired borrowers. So, if it’s something that features in your financial strategy, don’t leave it too late – keep a close eye on that retirement date.
And be aware, too, that if you extend your loan term, though it’s another way of keeping repayments low, you could end up paying way more interest overall.
From your mid-50s
Downsize: Don’t miss that the cheapest way of using your home for a cash injection is to sell it and buy something of a lesser value (bearing in mind that many people who trade a house for an apartment end up down-sizing but up-pricing).
From age 55, the government has also increased the incentive by allowing you to deposit $300,000 of the proceeds into super, where they can grow with only 15 per cent tax on earnings (for balances under $3 million), becoming tax-free once you retire or turn 65.
The further beauty is that each person in a couple can do this. The only restriction is that you need to have owned the property for 10 years. But there are two ways to get out equity without selling, also usually from age 55...
The reverse mortgage and home reversion scheme: A reverse mortgage is still a type of home loan but works the opposite way in that the debt ratchets up rather than whittles down.
Available as a lump sum or income stream, you make no repayments. Instead, the ultimate debt is repaid by other funds if you choose, or from the sale of your house earlier or on your death (check that all options are available).
The interest due will roll up until that time, and because you will pay interest on interest, can become large. Of course, the value of the property might also increase over that time.
Most importantly, a no-negative-equity guarantee means the debt can never grow to more than the value of the property, and you can never be evicted for this reason (see if there are any other reasons though).
The home reversion scheme is an alternative with different advantages and disadvantages. Here, there is no interest payable, rather this is a shared ownership arrangement from the outset.
You sign over a portion of your home that is then recouped by the financial institution, again from your other funds if you choose or from your property’s sale before or on your death (check). It’s essential to get advice before making either a reverse mortgage or home reversion move.
Some considerations are that with a home reversion scheme, you have an immediate liability … say, 40 per cent of your home is gone the day you settle. Of course, your – in this case – 60 per cent could still increase in value.
You can delay this liability with the reverse mortgage approach – the debt only grows over time. The less time it has to grow, the better, and you might also have the option not to draw down on your funds until you need them.
The longer you wait before taking out either product, the more money you can extract. Finally, both moves can potentially deplete your kids’ inheritance – just so you know. And there may be less money left to fund aged care down the track. Speaking of, there is a cheaper option available later in life…
From age 67
Home equity access scheme: At age 67, a government opportunity kicks in for people eligible for the age pension.
The home equity access scheme via Services Australia is like a reverse mortgage in that you take out a loan against your equity that rolls up. However, the interest rate is far cheaper – it’s currently 3.95 per cent versus, say, 8 per cent for a commercial reverse mortgage.
Being an official scheme, however, you can also get out far less and only as a small lump sum and then regular income. Your pension and loan payment can’t be more each fortnight than 1.5 times the full age pension.
Know, though, that for asset rich but cash poor Aussies, at every age there are options.
Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com. Follow her on Facebook, X and Instagram.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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