Phil is aged 72 and Maree is 69. They bought their home 10 years ago for $660,000 and it is now valued at $1,200,000 – average growth of 6% per year. They have an existing mortgage of $120,000 and would like to access $800 per month for the next 10 years. What does this mean for their equity in the future?
When Phil and Maree consulted with Paul, he took them through the Equity Projection Process to clarify what was possible for them. This is the projection he was able to present to them.
| Now | After 5 years | After 10 years | After 15 years | |
|---|---|---|---|---|
| Home value | $1,200,000 | $1,391,129 | $1,612,000 | $1,869,571 |
| Owe to lender | $120,995 | $211,978 | $330,205 | $429,078 |
| Your home equity | $1,079,005 | $1,179,151 | $1,282,495 | $1,440,078 |
Phil and Maree have freed up their cashflow with a refinance, and improved their lifestyle with an income stream. They have assessed their future equity position and decided there is enough equity to pay for any aged care and provide an inheritance to their 2 children.
*Based upon an average property growth of 3 % and an average interest rate of 5.25%
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