Family spending time together at home
For the majority of families, their home and superannuation will be the two most valuable investments they will own in their lifetime. Here we discuss how the family home might be used to potentially assist in wealth and lifestyle creation.

For those that have purchased their family home, a great deal of value is often held within its walls. This value comes in many forms including physical, emotional, financial and more. Specific wealth strategies can be created around anything of financial value and, once in place should be fine-tuned throughout various life stages. So what should property owners consider when it comes to utilising, most effectively, the home in which they live?

For those of you that are looking forward to your retirement

The children are older and are perhaps even at the stage where they have moved out, or are at least paying their own way. You are working on maximising your retirement savings and your income is reaching, or is at its peak. Then why do you feel cash poor? As a home owner it is important to realise that you are also asset rich. So how do you release some of the value in that asset?

Some decide this is a good time to downsize, which achieves several valuable goals. Firstly, it gives you the freedom and the time to downsize at your own pace and on your own terms, rather than suddenly having to do so when health or other issues force a move. This means you can take your time to plan and choose the lifestyle you desire, rather than having to accept whatever is available in your price range at the time that an urgent move is required.

It also frees up a lot of equity for investment elsewhere, money that was previously locked up in the value of the family home. This allows for diversification and different investment strategies to be put in place, such as a balanced mix of income and growth, instead of growth alone. Additionally, the money that is now available could be used to generate an income. However, as with any investment strategy, you should consider the level of risk you are comfortable with, your goals and the investment timeframe.

A family home containing spare bedrooms can itself be used to generate additional income. Granny flats can be rented out to long-term tenants or short-term visitors. Other areas of the house can be renovated to create spaces that can also be rented. In the age of property-sharing websites such as Airbnb, spare rooms in a house located in a desirable area can provide an impressive income for those that welcome the company of travellers. Such income can continue into the future in order to help fund a retirement.

A third option, if you haven’t done so already and if it fits your risk profile, is to borrow against the equity in your house to boost the value of your investment portfolio in a potentially tax-efficient manner.

Be sure to constantly review your insurances, particularly if you make the choice to take in renters, and to evaluate your home loan arrangements to ensure you are receiving the very best deal. Now is also the time to put in place a solid estate plan, including wills and enduring powers of attorney, to make sure the value in the family home is looked after and is distributed in accordance with your wishes – should anything happen to you.

Key takeaways:

  • Consider downsizing
  • Can you create income from your house?
  • Borrow against equity to invest
  • Review your insurance levels
  • Put an estate plan in place

Source: Count Financial

Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

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