Melissa Jenkins
(Australian Associated Press)

Do you imagine a mortgage-free retirement?

Decades ago, many Australians left the workforce secure in the knowledge that they owned their own homes.

But more than four in 10 home owners aged between 55 and 64 still had outstanding mortgage debt in 2013/14, according to a recent report by economist Saul Eslake for the Australian Institute of Superannuation Trustees.

And almost one in 10 home owners aged 65 or over were still paying off mortgages.

“These trends, if continued – and there is little to suggest that they won’t be – suggest an increasing proportion of Australians will reach retirement age having either never attained home ownership, or still having at least some mortgage debt outstanding on their homes, which they will then rationally pay off using some or all of their superannuation savings,” Mr Eslake said.

So how can you cruise into your golden years mortgage-free?

• Reviewing your existing loan and considering whether your interest rate is reasonable and if you can make extra repayments.
• You can also extinguish your loan quicker by making repayments fortnightly, or even weekly, instead of monthly. You’d be surprised how much the term is reduced, it makes a significant difference.
• It can also be helpful to use offset accounts to reduce your interest and better manage your cash.
• Some banks offer multiple offset accounts linked to one home loan that can be allocated to different areas of your budget, like saving for a holiday or a car.
• You can use an online mortgage calculator to work out what your repayments should be to ensure you own your own home before retiring.
• Great inroads can be made by paying off your mortgage while interest rates are low, and then extra cash can be paid into superannuation.
• You have got to get the balance right between putting money into super and paying down debt.
• We don’t know what (superannuation) funds are going to return and we don’t know where interest rates are going to head.
• Empty nesters could consider downsizing before retirement, which can deliver extra cash, depending on where and what style of property you buy.
• It’s important to remember you can continue a small amount of paid work while accessing the age pension.
• Singles can earn $164 a fortnight without affecting their pension, while couples can earn $292 combined.

IMPORTANT: Seek advice in relation to your own personal situation and have a plan in place well before you reach your goal retirement age.

Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters and consult your advice provider.