Seniors Equity Release
Seniors Equity Release allows a property owner to sell a percentage of their property to a property investor via the DomaCom Fund in return for a lump sum or a regular payment plan that can be used for any purpose, whilst retaining title to their property and lifetime occupancy.
See more information regarding Downsizer Contributions.
Property Owners
DomaCom’s Seniors Equity Release enables you to sell a percentage of your home to one or more property investors in return for a lump sum or a regular payment to supplement your income. By agreement, you retain the title and have a permanent right of abode until such time as you decide to sell your home. You can also opt to rent out your home and retain 100% of the rental income.
Because you are selling a percentage you will have to pay service fees on that percentage of ownership to the property investors but to make it easy DomaCom will purchase a little more of your house to cover the service fees for the next 5 years and pay the notional rent to your property investors on your behalf. In 5 years’ time, another partial sale will occur to pay notional rent to your property investors from the service fees for the next 5 years and so on. This means you never have to worry about paying the service fees.
There are several benefits for seniors who prefer to stay in place but release some equity from their home, using the DomaCom Senior Equity Release product:
– You can access cash in three ways; an up-front lump sum payment, a regular monthly payment of an amount you choose with the added flexibility to change it when you need extra for unexpected expenses, or a combination of these options.
– Your maintenance, repairs and building insurance costs on your home are shared with the property investors in proportion to their investment.
– You have a permanent right of abode and the ability to rent out your home and retain the rent.
– Your Service Fee Percentage is fixed and will not change over the life of the agreement.
There are no restrictions on where your home is located so equity release can occur anywhere provided property investors can be found. These may be family or friends, self-managed superannuation funds or unrelated parties.
Full details are contained in the Product Disclosure Statement.
Advice
It is an Australian Securities Investment Commission (ASIC) requirement that property owners receive advice from a DomaCom Senior Equity Release Accredited Adviser. If you do not have a financial adviser to undertake accreditation, DomaCom can refer you to an accredited adviser.
Consumer Guidance
ASIC also provides some helpful guidance on “How to decide if home equity release is right for you”.
The DomaCom Senior Equity Release product is a type of Equity Release Agreement, not a Reverse Mortgage. See what ASIC has to say about the Equity Release Agreement at: MoneySmart.gov.au
With the DomaCom Senior Equity Release product, you remain on the property title and you will always have the right to remain in your home until you sell the property, no matter how much home equity you release.
Unlike a Reverse Mortgage where your future home equity will be impacted by unpredictable interest rate movements, the DomaCom Senior Equity Release product provides greater certainty as it is based on a fixed Service Fee Percentage that will not change over the life of the agreement.
Expression of Interest
Property Investors
Seniors Equity Release is an opportunity for property investors to choose residential properties in locations that interest them and invest in return for a fixed rental income of 3% and a proportional share of the capital value of the property.
The key benefits of investing in residential property in this way includes the ability to spread your allocation to residential property across multiple properties in different geographic locations to achieve diversification.
The minimum investment is $2,500.
Your property interest is held in the form of units in a sub-fund of the DomaCom Fund and the sub-fund holds a caveat over the property to the extent of the equity release.
Notional rental income is assured with long term owner/tenants in place. DomaCom oversees the property to ensure it is well maintained and to exit you can offer to trade your units online at any time, or wait until the property is sold.
Full details are contained in the Product Disclosure Statement.
Financial Advisers
DomaCom’s Senior Equity Release (SER) is a financial product you can use to engage and connect your senior aged clients seeking equity release from their property with your investment clients seeking exposure to residential property.
Property Investors receive a fixed notional rental income and a share of the capital value of the property as independently valued, and in proportion with their investment.
Seniors can opt to receive a lump sum or a regular payment as suits their needs and by agreement have a permanent right of abode. Their property remains theirs to live in or rent out and when it is sold they receive the residual sale price at the same time property investors receive their share of the proceeds.
Consumer Guidance
ASIC also provides some helpful guidance on “How to decide if home equity release is right for you”.
The DomaCom Senior Equity Release product is a type of Equity Release Agreement, not a Reverse Mortgage. See what ASIC has to say about the Equity Release Agreement at: MoneySmart.gov.au
With the DomaCom Senior Equity Release product, your client remains on the property title and they will always have the right to remain in their home until they sell the property, no matter how much home equity they release.
Unlike a Reverse Mortgage where your client’s future home equity will be impacted by unpredictable interest rate movements, the DomaCom Senior Equity Release product provides greater certainty as it is based on a fixed Service Fee Percentage that will not change over the life of the agreement.
DomaCom’s Senior Equity Release product requires mandatory advice
DomaCom is the only Senior Equity Release that is a financial product which means you can charge a fee to advise on it. Senior Australians interested in this product must have adviser sign-off so there is a significant market opportunity.
Accreditation
It is an ASIC requirement that advisers need to be accredited to advise on fractional property investment and senior equity release. Successful completion attracts CPD points.
For further information or register go to Enrol Now
Funding sources for Senior Australians to meet Aged Care Needs
Downsize
Significant transaction and relocation costs
Agent fees, conveyancing, stamp duty
Lifestyle impact of relocating
Family, friend, familiar surroundings
Reverse Mortgage
Not well funded
Availability subject to the liquidity of lending markets
Minimal lifestyle impact
Seniors do not need to relocate
Uncertainty about residual equity
What will be left for the estate
Home Reversion Scheme
Limited institutional funding
Only one bank provides this
Restricted postcodes in limited capital cities
Mainly Sydney and Melbourne
Uncertainty of residual equity
What will be left of the estate
Government Pension Loan Scheme
No lump sum available
Limited payments
Equal or less than pension payments
DomaCom Senior Equity Release
Well funded
SMSFs via the DomaCom Fund
Attractive income yield PLUS capital growth
Minimal lifestyle impact
Seniors do not need to relocate
Progressive sale of equity
Provide lump sum or regular payments and fees
Fixed costs
DomaCom’s Equity Release – an elegant solution where the time horizons of both the Investors and the Seniors are more closely aligned.
*Sources: APRA Statistics. Deloitte, Dynamics of the Australian Superannuation System: The next 20 years 2013-2033
Disclaimer
Whilst every effort has been made to ensure the accuracy of this calculator, the results should be used as an indication only. They are neither a quote nor a pre-qualification for a Senior Equity Release product. The results from this calculator are based upon the information you enter into the calculator and are an approximate guide only. They do not constitute specialist advice. The results from this calculator should not be relied upon for the purposes of entering into any legal or financial commitments. Users should seek appropriate independent professional advice from an ERP qualified adviser prior to relying on, or entering into any commitment based on any results generated by the calculator.
