Dianne Shepherd

Seniors debt-free equity release provider Homesafe Solutions Pty Ltd continues to operate during the COVID-19 crisis, helping seniors in need of funds in these very difficult times.

Homesafe’s debt-free equity release solution, Homesafe Wealth Release^®, remains available to homeowners as the business has transitioned to a virtual online service, and has already assisted new customers via virtual technology in recent weeks.

“For 15 years we have prided ourselves on our old-fashioned approach to service focused on meeting in person with our customers, however we are pleased to confirm we have a dedicated team who have transitioned successfully to building customer relationships and trust, in a contactless environment.”

Demand for products allowing Australian homeowners to access the equity in their homes remains strong, says Dianne Shepherd, Chief Operating Officer of Homesafe Solutions Pty Ltd – the provider of the only debt-free equity release solution, Homesafe Wealth Release^®, which launched in 2005.

“Many over 60s are suffering financial stress, yet don’t qualify for additional government assistance.

“We are receiving a number of enquiries from senior homeowners in their 60s and 70s who have seen their superannuation balances diminish or have been impacted by more cuts to interest rates and continue to struggle to service or pay out their debts.

“Using some of the equity in the home provides a way to meet living expenses or pay out the mortgage, to achieve some peace of mind at this time.”

Homesafe Wealth Release is the popular alternative to a loan product or reverse mortgage for seniors. The homeowner agrees with Homesafe to sell a share of the future sale proceeds of their home in return for a lump sum payment today – there are no repayments, no capitalising interest charges and Homesafe only receives it share of the sale proceeds when the home is sold when the homeowner chooses, or after the death of the surviving homeowner. Homesafe is not entitled to receive any more than the agreed share and the homeowner is protected by rebates, if they sell earlier than anticipated by Homesafe.

“Homesafe has received a number of enquiries from customers and referral partners over the last few weeks, and we have been pleasantly surprised how successful the virtual approach has been for the business and our customers. We remain open for business and our team is here to help during these challenging times”, said Ms Shepherd.

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Dianne Shepard

A recent study suggests more Australians aged over 55 are considering raiding their superannuation to pay off mortgages, highlighting the need for clarity around alternative strategies to eliminate mortgage debt, according to a leading equity release provider.

Findings from RMIT and the Australian Bureau of Statistics revealed the number of Australians aged 55 to 64 still paying down their mortgage has jumped from 14 per cent to 47 per cent in 26 years. RMIT suggests more Australians may be tempted to use their super to eliminate this mortgage debt.

The RMIT report follows a recent ABC TV 7.30 Report investigation which said one million households in Australia currently have at least one person who is 65 years or older and in debt: and that half of all 50-year olds expect to retire at 67 still carrying mortgage debt.

Dianne Shepherd, Chief Operating Officer of equity release provider Homesafe Solutions Pty Ltd, says it’s concerning Australians may feel compelled to use super when equity in the family home could be a viable solution. “This issue highlights the need for more clarity on alternative strategies to pay the mortgage aside from raiding the hard-earned superannuation nest egg.

“Using superannuation to pay off the mortgage may diminish lifestyle in retirement, as people may then be relying solely on the aged pension.

“Releasing some of the equity from the family home may be a powerful alternative strategy which allows retirees to reduce or eliminate their mortgage and keep their super intact.”

Ms Shepherd says paying off the mortgage is among the most common uses for Homesafe’s equity release product, Homesafe Wealth Release®, which is currently the only equity release solution providing access to a lump sum debt-free. “It’s important any equity release solution is debt free when paying off a mortgage, otherwise you end up chasing your tail with debt.”

She said escalating mortgage debt among over-55s shows the importance of considering the family home as the ‘fourth pillar’ of retirement. “The family home, as a store of wealth, has potential to become the fourth pillar of the retirement income system.

“This would allow more Australians to ‘age in place’ without being hampered by excessive debts such as outstanding mortgages.

“It’s vital the wider ageing population is aware of all their options and can access the stored wealth in the homes when they need it the most.”

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Mr. Keating recently made headlines suggesting an insurance scheme funded via a ‘longevity levy’ of 2-3 per cent of wages, to provide income for people aged 80-100 who have outlived their savings.

Mr. Keating says saving 9.5% of wages from age 25 to 65 cannot realistically be expected to provide an adequate income until age 90.

Mr Szabo agrees this will become ever more important as longevity continues to improve, but says there is already an answer to funding this improved longevity – the family home. “Longevity insurance already exists for many senior Australians in the form of the family home.”

Mr Szabo said while there are affordability challenges in home ownership for younger generations today, current and ‘soon to be’ retirees enjoy high rates of home ownership. “It would not be equitable to require younger generations to pay a levy to fund incomes for generations enjoying high rates of home ownership, when there is an obvious alternative – expecting home-owning retirees to use some of their housing wealth to fund retirement.”

For many senior Australians who may have exhausted superannuation and other savings, the home is their main or only asset. “Perhaps it would make sense for retirees to first draw down on their superannuation but as this runs out, rather than turning to an insurance scheme funded by an impost on working Australians, senior Australians can turn to their home equity to fund the next stage of their retirement.

“Both assets were built up gradually, and it should also be possible to draw each of them down gradually.  Home equity could also be drawn down to augment superannuation and ensure it does not run out.”

Mr Szabo said home equity release has not been viewed in Australia as a mainstream way of funding retirement, but this will have to change with improvements in longevity. “There needs to be more discussion around the different ways seniors might access this wealth.

“Surely utilising home equity will be preferable to another impost such as a longevity levy on working Australians.”

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Dianne Shepard

A review released this week by ASIC into the reverse mortgage market in Australia, has drawn attention to the need for safe and certain equity release solutions for older homeowners.

Homesafe Solutions Pty Ltd, the provider of Homesafe Wealth Release^®, the only competitive alternative to reverse mortgages in the equity release sector, welcomes the report’s recommendations which seek to ensure protections for senior homeowners.

Dianne Shepherd, Chief Operating Officer of Homesafe said: “The wealth built up in the family home has become the fourth pillar of the retirement system in Australia, and it is important for seniors, today and in the future, to have access to products which can provide the ability to access this wealth when needed the most”.

Homesafe Wealth Release^® has been designed to provide older homeowners a mechanism to access the wealth in their home, by providing an upfront lump sum payment, in such a way which addresses future uncertainty. Specifically, Homesafe Wealth Release^® is a property transaction and not a loan, which enables the homeowner to sell a capped future share of the eventual sale proceeds of their home in return for a cash amount today whilst retaining the right to live in the home and choose when they sell. The capped share approach, provides greater certainty by ensuring the homeowner is not burdened with property growth, longevity or interest rate risks, as may be evident in alternative equity release products.

For over 13 years Homesafe Solutions Pty Ltd has provided its debt free equity solution via its customer centric, ‘one-on-one’ approach to customer service, and has built a respected reputation in the market by providing a facilitation model without sales staff or selling strategies.

“Homesafe has continued to assist its growing customer base through understanding their needs and objectives, and long-term aspirations. Homesafe Wealth Release^® has been designed to offer a solution which can protect the future equity in the home, to ensure the homeowner can plan for future aged care needs or estate planning for their beneficiaries”. Ms Shepherd said Homesafe acknowledges the recent release of the ASIC review into reverse mortgages and supports recommendations which seek to ensure greater protections for senior homeowners.

“Moreover, we are pleased the review confirms the need for equity release products across the wider market, to assist seniors achieve financial independence in retirement – a need which is confirmed by the ever-increasing demand for our debt free alternative to the reverse mortgage product.”

About Homesafe Wealth Release

Homesafe provides a debt-free home equity release solution where the homeowner agrees with Homesafe to sell a share of the future sale proceeds of their home in return for a lump sum payment today – the home is only sold when the homeowner chooses, or after the death of the surviving homeowner, with the unsold share of the sale proceeds retained by the homeowner or their Estate. Homesafe is not entitled to receive any more than the agreed share.

Homesafe Wealth Release was established in 2005 in conjunction with Bendigo and Adelaide Bank.

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Dianne Shepard

Equity release specialist, Homesafe Solutions Pty Ltd (Homesafe), has welcomed further steps taken by the Federal Government in recognising the need to address the longevity concerns of Senior Homeowners and their desire to remain in their homes long-term, rather than downsize.

Whilst acknowledging the expansion of access to the Pension Loans scheme may assist some seniors to meet day-to-day living costs, the scheme, more broadly, recognises the opportunity to use the wealth in the home to provide access to financial support, and is consistent with the view the family home, as a store of wealth, has become the fourth pillar of the retirement income system.

Homesafe General Manager, Ms Dianne Shepherd, said that “We are supportive of any measure which can assist seniors to stay in the workforce, support the needs of retirees to ‘age in place’, and provide a national program for the recording of Enduring Powers of Attorney to protect the more vulnerable sections of our community.

“However, we hope the Government will consider providing more comprehensive support to providers of equity release solutions in the private sector, to assist the wider ageing population whose financial needs may not be met by such a scheme.”

Historically, fewer than 1000 retirees have taken up the Pension Loan Scheme, which creates a debt to the Commonwealth Government subject to a compound interest rate and secured by a statutory charge over the home. Whilst a small segment of senior homeowners may seek to apply for the expanded scheme from July 2019, there will remain a significant number of homeowners over 60 years of age who will require access to more substantial funds to support their retirement needs either at pre-retirement stage, or over the long-term.

Homesafe assists an increasing number of over 60s to discharge mortgage debt for lifestyle purposes, renovations or assisting family members, by providing a debt-free alternative to release the equity from the family home.

“Rather than taking out a capitalising interest loan and then carrying the risk of future property growth rates as the debt increases, with Homesafe the homeowner can sell a part of their home today and protect a share of the future equity in their home for their own needs or to leave to their Estate.”

Homesafe says the role of equity release will become more important as the number of Australian ‘baby boomers’ reaching retirement continues to grow, and it is crucial that seniors understand the options which are available to them now, and what impact their decisions may have in future.

“Government has an unprecedented opportunity to recognise the role of equity release in Australia, not only the benefits for individuals but also the wider economy, and to support the efficacy of the industry by working with providers of equity release products to ensure the wider ageing population can access the stored wealth in the homes when they need it the most.”

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Dianne Shepherd

The ability for retirees to fund quality in-home care could be improved if more retirees could access their home equity debt-free, according to leading equity release provider Homesafe Wealth Release.

In-home care could play a major role in reducing pressure on the aged care system, which is showing signs of strain: A recent PwC study, commissioned and supported by Australian Unity, predicts an additional $24 billion in capital costs and an additional $13bn in annual operating costs will be needed to meet projected gaps in resi­dential aged care, in-home and community care and hospital beds by 2025 (assuming today’s policy settings).

Dianne Shepherd, General Manager of Homesafe, says the family home could provide better access to aged care services and potentially alleviate pressure on the system by allowing more retirees to fund in-home care. “Many retirees want to fund their aged care needs, including medical needs, nursing, and cleaning, while staying in their own home and still maintaining control over their future estate or financial planning needs.

“Retirees who own their home should be able to fund the care they need, without accumulating debt and adding additional financial stress.

“The ability to access home equity now without any interest payment burden or obligation to sell into the future meets shared goals of government, the aged care sector, and retirees.”

Ms Shepherd said it is important that any equity release option retirees may consider protects their right to remain in their home. “The right of homeowners to stay in their homes must be sacrosanct.

“Using debt products such as reverse mortgages to access aged care is often seen as a risk by retirees because they are concerned about such facilities eroding equity in their homes.”

Homesafe provides a debt-free alternative via a home equity release solution where the homeowner agrees with Homesafe to sell a share of the future sale proceeds of their home in return for a lump sum payment today – the home is only sold when the homeowner chooses, or after the death of the surviving homeowner, with the unsold share of the sale proceeds returned to their Estate. Homesafe is not entitled to receive any more than the agreed share.

Ms Shepherd said: “It’s essential senior homeowners can retain some control over the future equity in their home, in the event their lifestyle needs or circumstances change.”

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‘Longevity risk is a big sleeper issue in Australia.

An important recent study showing only half of Australians have planned financially for increased life expectancy may cause unnecessary fear among older Australians because it overlooks a key strategy for reducing longevity risk – the family home.

‘Longevity risk’, where retirees outlive their income due to longer life expectancy, is a big sleeper issue in Australia but too many advisors and advocates miss the simple solution – the family home.

The study, by National Seniors Australia, showed half of Australians were not considering longer lifespans in their financial plans, and found most Australians were failing to prepare for the likelihood their spending needs may rise in old age. The latest Retirement Income Report by research firm, Investment Trends, underlines the issue by finding only one in four Australians believe they will be able to live comfortably in retirement.

The National Seniors study proposed only two solutions including purchasing longevity insurance through the super fund, or paying 10 per cent of savings to purchase an annuity product.

But any discussion on longevity risk must consider the family home, according to Dianne Shepherd, general manager of leading equity release provider Homesafe Wealth Release®. “Studies on how to fund living longer are flawed if they do not factor in the family home.

“We shouldn’t discount the value built up in the home for providing access to future retirement income. Retirees who own a home should be able to relax about living longer.

“Retirees today have the ability to access the equity in the home and stay in their home in the future.

“One way to achieve this is by using a debt-free equity release approach, such as Homesafe Wealth Release and avoid being penalised by living longer than expected.”

Ms Shepherd said unlike reverse mortgages, the Homesafe Wealth Release solution has been specifically designed to provide senior homeowners with greater certainty as to how they can manage the impacts of their own longevity.

She said there is a growing need for debt-free alternatives to downsizing or reverse mortgages. “It’s essential senior homeowners can retain some control over the future equity in their home, in the event their lifestyle needs or circumstances change.”

Homesafe provides a debt-free alternative via a home equity release solution where the homeowner agrees with Homesafe to sell a share of the future sale proceeds of their home in return for a lump sum payment today – the home is only sold when the homeowner chooses, or after the death of the surviving homeowner, with the unsold share of the sale proceeds returned to their Estate. Homesafe is not entitled to receive any more than the agreed share, and does not provide any time limit by which the house must be sold.

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Commenting further, Peter Szabo said, “It’s been estimated that over 300,000 Age Pensioners will have entitlements cut with perhaps as many as 100,000 losing all entitlements from January 1 next year”.

“It is important that seniors affected by the changes to the Age Pension Assets Test should consider their financial position with care and not make quick decisions.

“Potential solutions to the reduction in the Age Pension need to be properly assessed including the role that home equity can have in replacing lost entitlements.”

Home owning seniors especially in Melbourne and Sydney have benefited from the significant increase in residential property values. This untapped source of equity can be used to augment existing sources of income to provide a dignified and financially secure lifestyle in retirement.

Peter Szabo continued, “With so many seniors about to lose or have pensions reduced as a result of the new Assets Test, a number will succumb to temptation, to sell their home and downsize”.

“Homesafe has consistently advocated that decisions to downsize need to consider the emotional cost of moving to a smaller home in an unfamiliar neighbourhood no longer surrounded by familiar faces and social networks”.

It also very quickly becomes apparent that smaller ‘downsized’ homes or apartments may be unable to cope with visits from grandchildren, family and friends – or accommodate the storing of a lifetime of memories in collectables.

“It is for all these reasons that seniors need to consider with great care any decisions they make and ensure that they do not forget the role that home equity can have in securing their financial future”.

“The Homesafe solution has been developed to allow seniors to access the wealth tied up in the home by providing seniors the ability to sell a share of the future sale proceeds for an immediate cash sum”.

“These funds can be used to replace lost pension entitlements, avoid the need to downsize and continue to live in the family home with dignity and financial security”, concluded Peter Szabo.

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Time for a seniors’ financial health check: Homesafe Solutions.

When it comes to living a dignified, stress free and financially secure life in retirement – far too many seniors continue to suffer unnecessary financial, emotional and often health related hardship said Homesafe Solutions Managing Director, Peter Szabo.

Yet all that would be required to tackle the solution to so much of this distress and provide peace of mind would be a reassuring conversation with a trusted financial planner, accountant, lawyer or broker willing to address the ‘elephant in the room’ i.e. the untapped equity in the family home affirmed Peter Szabo.

Notwithstanding the professional approach of financial advisers when engaging with seniors, it is important to address their emotional priorities first such as independence, dignity and leaving a legacy to the next generation.

“Accessing the equity in the family home and the life changing potential it would provide continues to be intractably resisted with the process, safeguards and benefits misunderstood and unappreciated by seniors, adviser intermediaries and government”, said Peter Szabo.

“At the core of any solution and advice offering is the importance of providing seniors with peace of mind is that their fundamental goals can be achieved along with the right to live in the family home until death.”

These were the very principles on which Homesafe was developed over a decade ago.

Peter Szabo continued, “As the result of deep emotional attachments to the family home and desire to leave a legacy for the kids, seniors and advisers deliberately omit the family home from the advice process.

“They (seniors) then go on to live lives of unnecessary hardship as they struggle to keep their heads above water financially and physically – all whilst residing in very valuable residential homes with untapped equity value unrealised or utilised”.

With rising health costs, rapidly depleting nest eggs and income sources failing to keep pace with inflation, it is now commonplace to see seniors defer medical and dental procedures that would alleviate pain and improve quality of life.

In addition, undertaking maintenance, major repairs to the home or alterations that would improve mobility and reduce risk of falls and injury are also deferred to the detriment of seniors.

Even though downsizing may be a good option for some seniors, such a decision needs to be carefully made having regard to all their needs. A decision in haste to alleviate financial stress may result in a very expensive and inappropriate undertaking and mistake with the unanticipated transaction expenses, social, family and community costs far outweighing the benefits.

In order to assist seniors, financial professionals must first take into account and understand how emotions impact this sector and their mindset to be independent, desire to stay in the family home and not be a burden on children and family members.

“Homesafe’s equity release offering was developed to allow retirees to live in the comfort of their home by providing senior homeowners the ability to sell a share of the future sale proceeds of their property for an immediate cash sum”, said Peter Szabo.

“These funds can then be used in a financial plan to retire debt, invest, augment superannuation, fund revenue streams, etc. – whatever is most appropriate to underpin a dignified and financially secure retirement”.

Peter Szabo concluded, “More and more senior Australians are finding themselves poorly prepared financially for retirement and need the advice of qualified professionals to help them make the most appropriate choices for their unique situations. Each senior requires an individual solution and the issues are far too complex for answers to be derived online from a website filled with general information in the hope of formulating and executing an appropriate plan.

“Financial professionals are best placed to help seniors navigate these important and potentially confusing and stressful decisions by accessing the untapped equity in the family home to support their financial needs to enable them to continue living with dignity in the family home”.

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Increasing complexity of superannuation driving consumers to seek alternatives.

The constant tinkering and growing complexity of superannuation can only serve to fuel a lack of confidence in the system and drive consumers to seek alternatives to fund or financially support their retirement says Homesafe Solutions MD Mr Peter Szabo.

Running counter to federal government objectives for Australians to fund their retirement through the current regime of industry, retail, corporate and SMSF structures – many will turn to the family home as an option seeing it as a better, simpler and relatively more secure alternative to the vagaries of the stock market, low interest rates and ongoing fiddling with legislation added Peter Szabo.

“While the present and projected growth in the pool of superannuation is impressive it masks a harsh reality confronting many pre retirees and that is they will be leaving the workforce underfunded. In fact the benefits of the superannuation guarantee that started in 1992 will see those retiring in the coming 20 years unable to afford the retired lifestyle they envisage today”.

“The bottom line for those still working currently is they will have to defer retirement and stay in the workforce for longer; and if they can afford it increase contributions to bolster their superannuation savings”.

Even some of the more optimistic estimates of the ‘comfortable average’ (e.g. $650,000 for a couple by Association of Superannuation Funds) needed to fund a reasonable retirement for seniors belies the reality that many have superannuation balances nowhere near the elusive numeric average affirmed Peter Szabo.

Hence the importance and often overlooked value stored in the family home – equity that can be accessed to supplement the underfunded superannuants and low income senior retirees.

Often retired senior homeowners are advised in haste to sell, downsize and find a smaller home not taking into account the financial, emotional and community costs of doing so – especially when there are alternatives that can unlock the value of the property and monetize some of the value thus allowing them to remain in the residence.

“Since Homesafe’s equity release product came onto the market just over a decade ago, it has been welcomed by many senior Australians as a solution far better and less stressful to downsizing or reverse mortgages”, said Peter Szabo.

“By releasing some of the stored value in the family home, Homesafe’s equity release solution provides seniors with a lump-sum they can use to fund the savings, superannuation, longevity financial gap”.

Unlike their predecessors, today’s younger workers will do better and benefit from the superannuation guarantee over their working lives. However they too will face unique challenges that will invariably impact on their ability to contribute consistently to superannuation.

Last week it was reported that Australian home ownership rates are declining and young people preferring to rent instead of buying a property in the current hotly contested residential property market.

Peter Szabo concluded, “Irrespective of whether they be current or past working generations for superannuation to provide sufficient funds to support a long and comfortable retirement requires consistent and regular contributions”.

“Continuing socio and economic uncertainty is the new norm for today’s working Australians that these factors will impact on their ability to contribute sufficiently to superannuation. Add in constant government tinkering with the superannuation system and owning a family home can prove to be a much needed asset lifesaver for ongoing financial wellbeing when it is time to face an underfunded retirement!”

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