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  • Writer's pictureSwarup Dutta

Asset Rich Cash Poor.Equity release options for Victorian retirees looking for income to live on

Unfortunately, many pre-retirees are finding they may not have enough income to fund their retirement.

The great dilemma; when to downsize and what to downsize to. The transaction costs of buying and selling property make it an expensive exercise, so it pays to do your home work. You need to identify how much income you will require to live on. Look at your bank account and Credit Card statements for the past 12 months to identify how much you have spent.

Once you have a clear idea of your present and future income needs, you will be in a position to understand how much capital you will need to “release” from your home for income purposes.

Capital can be released from your home in a number of ways; you can sell your home and purchase another which will meet your needs into the future. You can borrow against your existing home using a conventional mortgage or line of credit provided that you can demonstrate to the bank that you can service the interest payments. You can use a reverse mortgage, where interest accrues on the loan but is not required to be serviced. You can enter into an equity release facility where there are no interest payments but the lending institution will take a greater share of your property on eventual sale.

Another option to selling and moving is to subdivide your backyard.This is where we can help you subdivide your home. We do all the hard work and running around to ensure you can subdivide. You continue to live and enjoy your home where you have grown accustomed to the neighbourhood.

Property subdivision gives you the safest way to cash up without outlaying too much by way of investment. You only pay a nominal amount upfront for town planning production costs and pay the final amount when your backyard is sold. That’s a win- win for both of us as we both take the risk and do our utmost for a good outcome.

Our experienced site analyst will determine if your property can be really subdivided as there are numerous regulations determining the outcome and we are experienced in such subdivision matters. If we can subdivide your property, we will form an agreement to produce and manage all the town planning and subdivision documentation and manage the whole process which can take anywhere between six and eighteen months depending on the challenges your property contains and the local council. That’s not a lot of time if you are yet to retire.

Once the Subdivision and town planning permits are issued by your local Victorian council your backyard is up for sale at an agreed price. You pay our management fee when the property is sold.

This is a lot better than taking out a reverse mortgage where you still have to payout the accrued interest. And if the property value drops you will be in negative territory after five or more years. All properties cannot be subdivided with ease. We will do our utmost to get a good outcome and will be honest and transparent in our opinion. If it can’t be subdivided we will not proceed.

We have an extensive town planning knowledge for dual occupancy and medium density design and planning approvals. With over two decades of real life experience and having done our own dual occupancy we understand the risks and how to mitigate them for both our sake. If you don’t succeed with a good backyard subdivision we don’t get paid for our hard work!

And if you can afford to build the dual occupancy home and not “flick” the backyard subdivision we can help you document the permits and find a builder to complete the construction. There can be a good regular rental income if you hold the property and you could get a good sale price if you decide to sell the new dual occupancy home. Another option would be to move into the new dual occupancy home with its new kitchen and bathroom finished to your taste and sell the original home CGT free or rent it. The options are there for you to enjoy retirement.

The process is simple. Read on.

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