Financial solutions for retired homeowners

A number of factors are adding to the exorbitant cost of living, among them, increased rates and taxes, levies in Special Rate Association areas, increasing electricity fees, security and crime prevention measures, healthcare inflation, food prices, etc.

Plus, people are living longer and—with the improving quality of healthcare—this trend will accelerate.

For many retirees, fixed incomes simply don’t keep up with these increasing costs and many are compelled to sell their homes, “downsize” and move into complexes, or in with family members.

However—when surveyed by the American Association of Retired Persons (AARP)—90% of respondents said they would prefer to stay in their own homes as they age.

This is known as the “age in place” trend, which finds more and more seniors:

  • Are choosing to stay where they raised their families.
  • Love their homes—they are an emotional and financial investment.
  • Have their homes as one of their chief investments.
  • Are attached to their neighbourhood and communities, including clubs.
  • Are in control and decide how to live their lives—when to rise in the mornings, what and where to eat, and who to have as visitors, for example.

Retirement can be compromised and lifestyles negatively affected behind an ethos of “I’ll just keep working; I won’t treat myself; I can’t spend money on visiting my children and grandchildren.” A culture of deprivation, austerity and regret is likely to set in under such clouded thinking.

When faced with reduced disposable incomes, retirees may consider many options, and perhaps prime among them is to sell their home and “downsize” by moving into a retirement facility, or in with family. This is often a costly and inconvenient exercise.

You may borrow money separately to boost your income, but this can also be expensive and the older one is, the more difficult it is to qualify for loans from “traditional” sources such as banks.

You may consider borrowing money from family members, but they may not be in a position to help and this act may be stigmatising.

As a “last resort”, you can of course cut back and reduce expenditure, while staying in your home.

The downside of this is that life may become uncomfortable and depressing. You may be forced to forgo expenses to maintain your health and your home, not to mention deprive yourself of the pleasures you’ve worked so hard to earn, and deserve.

Home equity release finance is an ideal solution for elderly people who are asset rich but have declining disposable incomes owing to the soaring cost of living.

Water Financial’s Freedom Finance converts “casa to cash” in the form of a financial support package known as home equity release finance.

Freedom Finance is a loan extended in the form of monthly payments to those over a certain age, with your residential property as security.

There are no monthly payments made for the rest of your life, affording you access to equity to maintain or enhance your quality of life.

What’s more, we can help you reduce costs, such as by utilizing solar panels, water saving devices and energy efficient appliances.

We will review your financial affairs by examining and optimizing your income statement and balance sheet.

We will investigate generating additional income from your home, for example by implementing Airbnb, or by taking in a tenant if you have the appropriate space.

We will focus on your overall well-being by examining your healthcare plan and advising how you can use technology to reduce costs and improve your standard of living.

Freedom Finance does not bind you to a permanent agreement, you still have the right to sell your home at any point and settle your loan, or you can vary the monthly amounts you receive (subject to the maximum that our rules allow), or cancel the loan agreement and repay the outstanding amount. Home equity release finance is fully flexible: it’s your money and your asset.

We do require a mandatory annual visit to inspect the condition of your property, and we will sit together with you every 5 years to review your position, reassess and advise to maintain or alter your plan. All other requirements are clearly explained in our terms.

There will never be additional repayments, you will be immunised from external shocks and can keep living comfortably, uncompromised, for as long as you choose to, or for as long as you live. Treat yourself, your children and your grandchildren!

For information on the conditions under which the loan becomes repayable, and by whom (upon your demise, by your estate) please read our FAQs.

Who qualifies for home equity release finance?

  • Homeowners (bond free) on the Atlantic Seaboard of Cape Town (this is a requirement for the pilot phase and will expand in time).
  • Single persons over the age of 75 years.

Water Financial’s Freedom Finance comprises a loan to the value of a percentage of the value of your property, spread over 60 months, whereupon the loan terms may be extended, or a new agreement be entered into for a further 5 years.

These criteria will change in due course – please do send us your contact information so that we may get in touch and inform you of any developments.

Frequently asked questions