Transcript:

Arthur Naoumidis: I’d like to now introduce our senior equity release product that is being released as we speak.

It’s a very exciting new product that enables vendors to or retirees to sell a little bit of their house to provide either an income stream for their retirement lifestyle funding or provides capital for other purposes.

The way I’d best describe the product is by using an example.

Let’s say Mrs Smith who is 78 years old, owns a $500,000 house and is in need of $100,000.

We would say, you need to sell 20% of your house, however the reality is that she won’t be able to pay the rent. So rather than buying $100,000 of the house, we buy $140,000 and the $40,000 stays in a sub-fund after we pay her the $100,000.  Then, the fund pays rent on her behalf for the next 5 years and this is done every 5 years thereafter.

Once that 5 years of rent is used up, investors will now acquire another $30,000 or $40,000 to pay the next 5 years worth of rent.

It’s quite a powerful product that is simple to understand. If I sold my whole house to an investor and wanted to continue living there, I’d have to pay rent.

So if  sell 1/4 of the house, I’d have to pay rent on that 1/4 and that is our business model, it’s very very simple.

There are many retirees who simply don’t want to downsize by selling their whole house and moving in ‘Golden Acres’ retirement home or into a small apartment somewhere. They want to stay in the house that they live in.

Also, at any time the retiree or their family can acquire the interest back by buying it back from us which makes it fairly flexible.

The other feature is that the family, the siblings, the children can also be the ones who provide the equity release and who invest in the sub-fund.

It’s a very powerful tool for financial advisors to include the whole family.