Domacom launches Senior Equity Release

Arthur Naoumidis

Arthur Naoumidis

DomaCom’s long awaited Senior Equity Release was launched this week with an adviser accreditation course that will enable financial advisers to provide sign-off to seniors 60 years + looking for an equity release on their home.

DomaCom is the first equity release to be issued as a financial product. All other equity release products are structured as either credit or real estate products effectively excluding financial planners who do not hold the appropriate credit or real estate license required for those products, says the company.

DomaCom CEO, Arthur Naoumidis said, “Senior Equity Release is the first financial product in this space that will give financial advisers a significant place at the table in a growing and vulnerable sector that in many cases is asset rich and cash poor. Hence accreditation is crucial and the first group of advisers will be going through that over the next few days”.

DomaCom spent 6 ½ years to secure the necessary reliefs from ASIC to launch this product. It has undergone consumer testing and substantial review by the regulator.

Senior Equity Release enables advisers to engage and connect senior aged clients with wealth accumulation clients such as SMSFs as both have a similar time horizon in terms of their respective needs.

Seniors can apply to sell a fraction of their home and must nominate the amount they wish to receive and how they wish to receive it, either as a lump sum or a regular monthly payment.

The monthly payment is a staggered settlement of the equity release and has the flexibility to be dialled up or down to give the senior access to additional funds as may be required.

Investors in a senior equity release receive monthly rental income of 3% net of all fees and “own” a share of the capital value through units in a segregated sub-fund of DomaCom. When the property is sold in full the vendor and investors receive their share of the sale price. This may occur when the vendor passes away or if they decide to move.

Investors also have the option to sell their units via DomaCom’s online liquidity facility which operates in a similar manner to an equities page with market depth and buy/sell order screens.

The company says the benefits to seniors and investors are quite compelling. Seniors can unlock equity and stay in place for as long as they like. They can rent out the property and retain the rent. This may present a good opportunity to trial retirement village living before they sell.

Maintenance, repairs and building insurance is shared by the vendor and the investors.

One of the biggest advantages to DomaCom’s SER is there are no postcode restrictions on the property. Anyone can get equity release provided there are investors to come in.

Mr Naoumidis said that the obvious investors for many would be family and friends who take an equity position in the property, perhaps using their super to do so.

For investors the benefits are also obvious. They can choose properties in locations that interest them. They can limit investment in residential property in accordance with their asset allocation and they can spread their investment across multiple properties in different jurisdictions to increase diversification.

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