[Securing the ability to service your home loan]
The affordability of homes in Australia has steadily declined over recent years. Serious concerns hover over the community at large when home loan serviceability for a many Australian home-owners is under threat.
Home loan servicing (the ability to pay the home mortgage commitment – whilst maintaining ‘normal’ lifestyle and other commitments) may not seem a problem while there is a regular income flowing into the household, however the security of the family home in the event of an accident or significant change in health status of a primary income earner is not adequately protected in most Australian homes.
An AMP Press Release in July 2011 highlights the plight of many households in Australia.
A fairly sobering experience is to sit down and discuss with your partner, what events should take place should the moment arise wherein you become significantly disabled – or worse, meet an untimely death. The step by step issues that need to be dealt with are harrowing enough: throw in the emotional turmoil; a couple of dependent children (or aged parents) – and a financial crisis scenario might start to emerge.
A sound wealth management strategy should take into account the need for access to liquidity (money) to meet bills to be paid, normal household costs, debts to service (including the mortgage) – and now added medical (and/ or funeral) costs. Waiting for a property to sell in such a situation may not provide funds quickly enough – and could leave the dilemma of your survivors needing to find an alternative place to live!
The simplest and most certain source of relatively quick access to money in these circumstances is through life insurance products. These products include Life (Death) Insurance, Total and Permanent Disability, Critical Illness and Income Protection insurance policies: and each plays a role in ensuring that the financial turmoil that follows events such as referenced above is able to be managed.
Some alternative strategies include:
- Holding adequate monies in (emergency) reserve;
- Ensuring that adequate assets with appropriate income stream are available; or
- Satisfying yourself that your family can secure their own futures (whatever that might look like to you)
How would you suggest securing a family’s future in such circumstances?