Money
14 truly useful ways to use your home equity
For most of us, home equity is the biggest (and most underused) financial resource we’ve got. Explore these smart, feel-good ways to tap into it and turn bricks and mortar into retirement freedom and security.
By Bron Maxabella
You’ve worked hard to own your home, possibly sacrificed more smashed avo brunches than you’d care to admit, and now it’s likely your biggest financial asset. But for many of us over 50, our home equity is sitting there quietly, doing very little, while we worry about retirement income, healthcare costs, kids’ education fees or that dream trip we’ve been putting off for a decade.
Your home isn’t just where your heart is, it’s also where your wealth lives. And unlike your super or savings, it’s often the most under-utilised part of your financial plan. Whether you want to travel, support your family, improve your home, or just sleep better knowing you’ve got a buffer, home equity can help you fund the future you actually want.
Here are 14 genuinely useful ways to unlock the value in your home and feel good about it.
1. Top up your super
Possibly not in the ‘inspiring’ category, but if you’re 55 or older, have owned your home for 10 years or longer and you’re planning to downsize, you should be able to contribute up to $300,000 per person ($600,000 for couples) from the sale proceeds of your home into your super using the government’s downsizer contribution rules. Even if you’re not planning to move, you could also access equity through a reverse mortgage or other home equity products and tip some into your super for tax-effective retirement income.
A super boost in your 60s can make a big difference to how long your money lasts in retirement (and how comfortably you get to live).
2. Renovate to future-proof your home
Sometimes the best way to use your home equity is to improve the home itself. That could mean upgrading your kitchen or bathroom now, or more strategically, making your home safer and easier to live in as you age. Think wider doorways, no-step entries, a walk-in shower, better lighting, or even installing a lift if the stairs are becoming a chore.
More on this here: 12 checks to ensure your home is a great place to grow old in
It’s not about preparing to be unwell, it’s about being smart and staying independent for as long as possible.
3. Tick off your bucket list
If not now, when? You’ve saved all your life, built up your biggest asset, and waited patiently through all the years of putting everyone else first. If there’s a trip you’ve dreamed of, your home equity could make it happen.
You don’t have to blow it all on a one-off splurge, either. A reverse mortgage or equity release can offer you a structured way to access the funds gradually. Not one trip, many trips!
Don’t miss: CITRO GUIDE: Fill your Aussie bucket list
4. Cover rising healthcare costs
Private health premiums don’t come cheap, and specialist care, dental work, mobility aids or in-home support can really add up. Your home equity can act as a personal healthcare buffer, helping you afford better care and stay healthier, longer.
Think of it as using your equity to invest in your quality of life both now and into your future. On my list? Engaging a weekly personal trainer – something I definitely couldn’t afford without a cash injection.
5. Give the kids a leg up (without selling the house)
Not surprisingly, this is often a big emotional driver for tapping into home equity. Helping our adult children or grandchildren with a house deposit, education costs or general financial support is a growing priority for many of us. Equity release lets us help now, when the kids need it most, without having to sell investments or dip into the nest egg.
More on this: Accelerate your legacy: how to release intergenerational wealth sooner
Just make sure to get financial and legal advice, especially around gifting and Centrelink rules. You want your generosity to be helpful, not financially harmful to your own future.
6. Create a rainy-day fund
Let’s face it, retirement isn’t all wine tastings and walking tours. Things go wrong – a medical emergency, a major appliance breaks, the car needs replacing. Tapping a small amount of home equity to create a cash buffer can bring huge peace of mind.
Having money set aside for emergencies can help you avoid high-interest debt, rushed decisions, or needing to withdraw from your investments at the wrong time.
7. Start a small business or passion project
Who said retiring meant you lose your sense of purpose? If you’ve always wanted to open a studio, run workshops, sell your creations or consult part-time, your home equity can give you the seed funding to get started without dipping into retirement income. Just remember to check the impact of any additional income against your Age Pension eligibility.
8. Fund retraining or further education
Your new side hustle (see above) might mean you need to switch gears with further study. Or maybe a short course, creative writing retreat or formal qualification has always been on your list. Use your equity to learn something new, just for the joy of it or to upskill for your existing role or future part-time work.
9. Generate income through investment
If you’re comfortable with some risk and get good financial advice, using home equity to invest in income-producing assets – like dividend-paying shares or managed funds – could create an additional income stream in retirement.
It’s definitely not a DIY job, but with the right strategy, it can be a smart way to put idle capital to work. Just be sure the potential returns outweigh the costs of borrowing.
10. Upgrade your digital life
Many over-50s find their tech setup is out of date, making everyday tasks harder. Home equity could fund a tech refresh to keep you connected, efficient and safe online. Think a new laptop, smartphone upgrade, faster wifi or even assistive devices that make ageing in-place more likely.
More on this: 10 smart tech devices to help you stay independent
11. Buy yourself a bolt hole
This one is a huge dream of mine and maybe one of yours too?
A little place by the beach. A caravan for weekend escapes. A country cabin for creative retreats. Your home equity could help you fund a holiday base that brings you and the family joy for many years to come.
You might even rent it out for extra income when you’re not using it. Just check the numbers carefully… and be super honest about whether you’ll use it enough to justify the cost.
12. Pay off lingering debts
Car loan still hanging around? Credit card creeping up? Overdone the Bank of Mum and Dad generosity? Using home equity to wipe out high-interest debts can be a very savvy move, especially if it simplifies your finances and reduces stress in retirement.
You’ll want to compare the interest rate on any equity loan with what you’re currently paying. But often, consolidating debts into one lower-rate product can give you freedom and cash flow you didn’t know you were missing.
13. Pre-pay funeral and estate planning costs
Admittedly, this isn’t the most exciting reason to tap into your home equity, but easing any future burden on your family can be a huge gift. Using equity to pre-pay funeral costs, update your will and get estate planning sorted brings peace of mind.
14. Ease into retirement sooner
You don’t have to go from full-time work to full-time leisure overnight. Using home equity to support a “trial retirement” – working part-time or taking a gap year in your 60s – can help you ease into the next phase of life on your own terms.
Of course, once you’ve reached your preservation age (typically around 60), you may be able to start a transition to retirement (TTR) strategy using your super. But accessing your home equity can also provide valuable breathing room, especially if you’re not ready to start drawing an income from your super or you’re still under Age Pension age (currently 67).
Of course, at 60 you can always take on a transition to retirement strategy via super, but your home equity can give you breathing room. Especially if you’re not quite ready to draw a pension from your super or are too young to access the Age Pension.
Ready to dream a bit bigger?
The key to all of the above is to approach things thoughtfully. Get professional advice, know your options, and make sure the strategy you choose supports both your goals and your long-term security.
Use Household Capital’s Home Wealth Calculator to see how much equity you could unlock:
Because after decades of working, saving and building a life, you’ve earned more than just the right to stay in your home – you’ve earned the right to make it work for you.
Feature image: iStock/Drazen Zigic
This article contains general information only. It is not financial advice and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their financial objectives, needs and circumstances. Citro may receive a referral fee for credit products obtained from Household Capital.
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