Using Home Equity to Maximise Financial Goals & Commitments for Retirement
Background: Meet Lisa & Jacob
Lisa and Jacob, a couple in their late 40s, approached us looking to make smarter use of their financial position as they worked towards retirement. They had built up equity in their home and maintained consistent cash flow but wanted to ensure they were using these resources effectively to grow their wealth.
They were also balancing multiple priorities, including a planned kitchen renovation, improving their retirement savings, and ensuring they had the right insurance cover in place. With historically low interest rates at the time, they saw an opportunity but needed clarity on how to take advantage of it without increasing unnecessary risk.
Key Results at a Glance
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Tax :$46,000 est. tax savings from concessional super contributions
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Investment growth:Generated $117,550 in gains by age 65 from investing approximately $180,000 over time
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Super benefits:$1,400 – $1,974 co-contribution and spouse contribution benefit
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Strong financial position:$184,854 financial position improvement at age 90
Why Did They Seek Advice?
- To understand how to use their home equity effectively for investment and renovation purposes.
- To ensure their surplus cash flow was being used efficiently.
- To explore strategies to grow their retirement savings.
- To review and update their insurance cover in preparation for retirement.
- To take advantage of low interest rates and optimise their financial position.
Strategies Implemented
Home Equity & Debt Structuring:
- Implemented a debt recycling (“debt-washing”) strategy, where non-deductible debt was repaid and redrawn for investment purposes.
- Structured lending to ensure interest on investment-related debt became tax deductible, improving overall tax efficiency.
- Used home equity to fund both investment opportunities and lifestyle goals, including a kitchen renovation.
Superannuation & Tax Advice:
- Recommended maximising concessional super contributions, resulting in an estimated $46,000 in tax savings.
- Leveraged spouse contributions and government co-contributions, delivering between $1,400 and $1,974 in additional benefits.
- Focused on building a more tax-effective retirement structure over time.
Investment Strategy:
- Invested approximately $180,000 progressively over time, using equity and surplus cash flow.
- Created a strategy aligned with their goals to accelerate wealth creation while managing risk.
- Modelled multiple scenarios to demonstrate the impact of different strategies, including maintaining their current position, implementing a $30,000 redraw, and combining the redraw with our recommended investment approach.
- This analysis clearly illustrated how additional investment strategies could significantly improve their projected net financial assets at retirement.
Insurance Strategy:
- Reviewed and updated insurance to ensure appropriate protection against death and disability risks.
- Ensured their financial plan remained resilient and protected, particularly during the transition to retirement.
Outcomes and Benefits
- Improved financial position with an estimated $184,854 increase in net assets by age 90.
- Achieved approximately $46,000 in tax savings through concessional super strategies.
- Generated $117,550 in investment gains from around $180,000 invested over time.
- Gained additional benefits of $1,400–$1,974 through co-contribution and spouse contribution strategies.
- Positioned to retire at age 65 with greater financial confidence and security.
- Successfully funded a kitchen renovation while continuing to build long-term wealth.
- Strengthened financial protection with updated insurance to safeguard against unexpected risks
Key Takeaway
This case highlights how using home equity strategically can unlock powerful opportunities to grow wealth, reduce tax, and support both lifestyle and long-term goals. With the right advice, Lisa and Jacob were able to turn existing resources into a structured plan that strengthened their retirement position while still enjoying life along the way.
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Important Note
Produced with our client’s permission. Names within this case study have been changed to protect the client’s right to privacy. The content of this case study has been based on a real-life client. Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.
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