Your Home Is Your Largest Asset
If you own a mortgage-free property, you're sitting on an asset worth €100,000 to €300,000. According to National Bank data, real estate represents on average 75-85% of net worth for households aged 50+.
Yet this asset "just sits there" and doesn't work for you. It's so-called "dead capital" — an asset you can't use for daily expenses without giving up your roof.
In Western Europe and USA, there are multiple ways to "unlock" property value. Some are available in Central Europe, others aren't. Let's look at all 5:
1. Sell and Downsize
How it works: Sell your property, get cash, move to a smaller or cheaper region.
Example: Sell a 3-bedroom in the capital for €220,000, buy a 2-bedroom in a smaller city for €120,000. You're left with €100,000 for living.
Advantages:
- Immediate cash — entire property value available
- Clean break — no obligations, no contracts
- Lower operating costs in smaller home
Disadvantages:
- Loss of social connections: Surveys show 68% of seniors say proximity to friends and family is their main reason for not wanting to move
- High transaction costs: Real estate fees (3-5%), legal services, moving — totaling €10,000-15,000
- Moving stress: Studies show moving is the third most stressful life event (after death of loved one and divorce)
- Adaptation challenges: For people over 65, adjusting to new environment can be very difficult
2. Rent Out a Room
How it works: Rent one room to a roommate, student, or foreign worker.
Advantages:
- Regular income €250-450/month depending on location
- Company — can be pleasant for lonely seniors
- Retain ownership and control over property
Disadvantages:
- Privacy loss: Sharing bathroom, kitchen, common areas
- Legal risks: Problem tenants, non-payment, property damage
- Tax obligations: Rental income must be taxed
- Low yield: €300 monthly from €200,000 property = only 1.8% annual yield
3. Reverse Mortgage
How it works: Bank lends you money against property value. No repayments during lifetime — debt repaid from property sale after death.
This product is popular in USA (60+ year history) and UK.
Advantages:
- Lump sum or regular payments
- Remain owner and live in your home
- No repayments during lifetime
Disadvantages:
- Compound interest: At 6% interest, debt doubles in 12 years. Borrow €100,000, owe €240,000 after 15 years
- Risk for heirs: Debt can exceed property value — heirs inherit nothing
- High fees: In USA, around 5% of property value
- Not available in Central Europe: No banks offer this product (as of 2024)
4. Sale-Leaseback
How it works: Sell property to investor or company and immediately rent it back at market rent.
Advantages:
- Immediate cash from full property value
- Continue living in same place physically
- No interest or growing debt
Disadvantages:
- High rent: Market rent €600-900 for 2-3 bedroom apartment — over 10 years you pay €72,000-108,000
- No legal protection: New owner can evict you after contract ends or raise rent
- No inheritance: Children inherit nothing
- Psychological effect: Living "at someone else's place", not your own
5. Lifetime Rent (HomeGrif Model)
How it works: Sign contract with HomeGrif who pays monthly rent in exchange for future property transfer. You remain owner and resident until end of life.
Advantages:
- Regular monthly income: €500-1500 depending on property value and age
- Remain owner: Your name stays on property deed
- Lifetime residence right: Registered in land registry, legally enforceable
- Heir protection: 50% of value for first 5 years — if you die early, family gets compensation
- No interest: Debt doesn't grow, payments are fixed
- No rent: You don't pay for living in your own apartment
Disadvantages:
- Property eventually transfers to investors — not to heirs
- Not suitable if you want to leave 100% value to children
- New concept — less well-known
Comparison Table
| Option | Stay living? | Income type | Debt | Inheritance | Available? |
|---|---|---|---|---|---|
| Sell + downsize | No | One-time | No | Remainder | Yes |
| Rent room | Partially | Small monthly | No | Full | Yes |
| Reverse mortgage | Yes | One-time/monthly | Growing | Uncertain | No |
| Sale-Leaseback | Risk | One-time | No | None | Yes |
| HomeGrif | Yes | Monthly | No | 50%/5yr | Yes |
Conclusion: For most property owners over 55 who want to stay in their home and need regular monthly income, lifetime rent is the best combination of housing security, financial stability, and heir protection.
Note: Every situation is individual. We recommend consulting with a financial advisor before making a decision.