Julie is 73 years and single. She lives in a 2 bedroom home she purchased for $420,000 8 years ago in an outer Melbourne suburb and which is now valued at $650,000. Her credit card has ballooned out to $9000, she desperately needs to buy a second-hand car for $15,000 and increase her income by $500 per month for the next 10 years without affecting her pension. She feels she should be able to live a reasonable retirement.
What does this mean for her equity in the future?
When Julie consulted with Paul, he took her through the Equity Projection Process to clarify what was possible for her. This is the projection he was able to present to her.
| Now | After 5 years | After 10 years | After 15 years | |
|---|---|---|---|---|
| Home value | $650,000 | $753,528 | $873,546 | $1,102,679 |
| Owe to lender | $30,495 | $77,587 | $160,948 | $255,138 |
| Net equity | $619,505 | $675,945 | $712,598 | $757,541 |
Julie has improved her cashflow by refinancing her credit card debt and is able to buy a car that should last her driving years. She has sought an additional $500 per month for the next 10 years, to make sure she can enjoy her later years with a little freedom. Julie will have enough equity to pay for any aged care and still leave an inheritance to her nephews and nieces.
*Based upon an average property growth of 3 % and an average interest rate of 9.25%
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