From empty nest to nest egg Decide your future before you retire, because that's when banks will still be willing to throw money at you. Picture: Thinkstock Source: The Daily Telegraph IT IS the classic quandary for many empty, or soon-to-be empty nesters across the country: what to do with the big family home once the adult children have finally flown the coop? Is the answer to stay in it, sell it, or rent it out? Now that the first of the baby-boomers are of official retirement age, the property and finance industries are dealing with more retirees and impending retirees than ever before. Experts are certain on one thing -- there is no one right or wrong answer. Personal circumstances, market movements (including real estate and share markets) and individual lifestyle choices are different for everyone. Baby-boomers have taken a hit on their savings and super investments in recent years, but one silver lining for many is that the family home has been paid off and is now worth a whole lot more than it was a generation ago. Deciding on what to do with the empty nest will take a lot of homework, but here are a few ideas to make your home work for you. Reversing gears Reverse mortgages allow eligible homeowners to borrow up to a certain per cent of the value of their property, or investment property, and then repay the debt from its sale when they move out or pass away. Repayments can also be made at any time. Belinda Williamson from Mortgage Choice says the group has a list of handy tips for anyone considering a reverse mortgage. First, it is a good idea to discuss with family members the decision to take out a reverse mortgage, especially the beneficiaries of your estate, because a reverse mortgage will affect their inheritance. The next step Mortgage Choice advises is to seek financial advice from an accountant to determine if a reverse mortgage meets your financial needs and desires, as well as a solicitor to satisfy any legal queries. And anyone who may be on the borderline of receiving a pension should check in with Centrelink to assess any impacts a reverse mortgage could have on benefits. Williamson also says getting help from a mortgage broker will help empty nesters find out how much they could borrow and to wade through the maze of products available. Another option for empty nesters is to use the equity built up in the family home to kick-start a property investment portfolio, renovate, or just to indulge a little. "Depending on your financial circumstances, and the advice you receive from your accountant and/or financial planner, your home equity can be used for a wide range of purposes," she says. Room at the inn In a recent survey by PRDnationwide, almost one in three homeowners would consider renting their spare room to help pay the mortgage. For empty nesters, renting out rooms in the big family home could not only fill the gap left by the kids moving out, it could bring in extra cash. PRDnationwide's research director, Aaron Maskrey, says the survey results were not surprising given the tough economic times. Renting out a spare room to generate extra cash could reduce the likelihood of suffering mortgage stress. "Getting on to the property ladder is increasingly difficult for thousands of first-time buyers in Australia and, increasingly, homeowners are making unused space earn its keep," Maskrey says, adding that finding a lodger has become easier with a range of websites advertising rooms to rent and flatmates. Ian Agnew, NSW and ACT general manager of Archicentre, the building advisory service for the Australian Institute of Architects, says rethinking home design could be the answer to our metropolitan housing crisis. He says for older Australians looking for a way to fund their retirement, purpose-built or redesigned properties could provide a healthy source of income. "By designing a home with two separate entries and facilities for cooking, laundry and bathroom areas, plus private outdoor spaces, a new homebuyer can build in a rental return to help pay for the new home, which in the future can be expanded at a later time into a full-size home by a simple renovation that joins both zones," he says. He says it is taking the idea of the "granny flat" and taking it one step further because it provides an alternative option for baby boomers who want to downsize without actually leaving their home. Move out and up Kevin Young, founder and director of The Investors Club, which helps investors build property investment portfolios, says selling the family home to downsize might not be the best option for empty nesters today. Stagnating property prices in many suburban areas and a tight rental market in our cities mean renting out the family home and leasing a smaller, more convenient property could be the best bet. Young says empty nesters can trade in the lawnmower and pool equipment for a "lock up and leave" lifestyle in an apartment or villa. "By not selling, you have a regular rental income and by renting a home elsewhere you avoid paying stamp duty and can change your mind after a year and try somewhere else if you want to," he says. "This method gives you flexibility and the chance to become a SKIN -- that's someone spending kids' inheritance now," Young says. Whatever the decision, Young says it is imperative that these empty nesters put a plan into action. Too many people wait until a year or two after retirement to decide about their future. You've got to set yourself up before you retire because, while you're still working, that's when banks will still throw money at you, and you can set up a line of credit," he says. Follow us on Twitter @DT--openhouse