Millions of Australians aged over 55 face home loan lending challenges, particularly around refinancing and obtaining home loans close to and post-retirement.

Together, 2.16m Australian households led by over 50s currently owe an estimated $600+ bn on their home loans.^[1] More than one-third of borrowers aged over 55 are paying interest rates on their home loans of more than 4%.^[2]

For most retirees, the pension is still their main income source^[3],  while one in four women and one in eight men reach the end of their employment with no superannuation at all.^[4]

As it prepares for launch in April 2022, Boomer Home Loans has already raised over $13m of capital, with investors including property management fintech entrepreneur Jindou Lee from HappyCo, former Fortescue Metals Group Chief Financial Officer Stephen Pearce, and former BNK Bank CEO Simon Lyons (who is also on the Board of Boomer Australia Limited).

Boomer Home Loans is in the process of developing its mortgage broker and aggregator offering and expects to launch to the B2B market in July/August 2022.

Following almost two years of discussions, Boomer is in the process of finalising terms with a large pension fund in relation to debt funding for its reverse mortgage loan book. The majority of Boomer Home Loans employees and most of the company’s major suppliers are also shareholders in the company.

The start-up is also in its Series B round where it aims to raise a further $4.3m.

Boomer Home Loans CEO Scott Phillips said the gap in financial services for people aged over 55 was a significant national problem.

“Millions of Australians enter retirement with the equity in their home being their most valuable asset and not enough in savings or super to support another 40 years of living costs, while many also commence retirement still paying off their home loan,” Mr. Phillips said.

“While the recent surge in Australian house prices has pushed household wealth to record highs, many older Australians are struggling to make ends meet.

“A lack of super or savings means many are scraping by week to week, while unexpected large expenses often force older Australians to sell their family home to access the capital they need.

“We know that mortgage brokers are trusted by millions of older Australians, writing two thirds of all residential mortgages across the country. We are investing in developing the right service for the broker and aggregator community as part of our go-to-market strategy.

“We believe that Australians over 55 deserve a better deal. They deserve a home loan lender that not only understands their unique needs but will help them plan and manage their finances in the lead-up to, and throughout, retirement.

“Boomer is Australia’s first over-55s specialist home loans provider and is here to change later-life lending for good.”

The need for better lending options for older Australians has been recognised by the Federal Government which recently relaunched the Home Equity Access Scheme which enables older Australians to draw a fortnightly payment using the equity in their home.

To support its growth ambitions, Boomer has launched a national advertising campaign to increase its workforce in preparation for launch.

The Perth-based fintech currently has a team of 30 people, with employees located in its Perth headquarter and Adelaide, and is looking to expand its workforce by 50% across the country to work closely with customers.

Boomer Home Loans will be launching to brokers in July / August 2022.

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[1] Illion Mortgage Nation Report 2020, https://www.illion.com.au/wp-content/uploads/2020/02/Mortgage-Nation-Final-V6-Compressed.pdf
[2] Boomer Home Loans – Consumer Home Loan Survey 2021
[3] https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release
[4] ASFA, Better-Retirement-Outcomes-a-snapshot-of-account-balances-in-Australia, 2019

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Scott Phillips

Retirees are too often left struggling with their finances without the help and guidance they need, according to one of WA’s leading institutional investors.

Chief Investment Officer Chris West says that for many Australians, retirement is a stressful period but that it doesn’t need to be that way.

“Everybody deserves dignity in retirement. For many Australians unfortunately it can be a time of financial stress, particularly for those retirees without enough super or those who are reliant solely on the Age Pension,” he said.

With so many underfunded retirees, and a significant number of them carrying debt, Chris believes that using home equity as a source of retirement funding can be a viable solution.

“For many retirees their home is by far their most valuable asset and it should be considered as a potential source of retirement funds, in conjunction with the right plan and advice.

A highly experienced institutional investor, Chris is the Chief Investment Officer at WA Super and was also a finalist in the national 2019 Conexus Financial Superannuation Awards Chief Investment Officer of the Year Awards.

Committed to improving the lot for Australian retirees, Chris has just joined a WA start-up created specifically to assist retirees with their retirement planning and finances.

Chris is the latest addition to the experienced team of finance professionals at Smooth Retirement, a new specialist equity release advice and funding service for retirees, coming on board as a member of the company’s Advisory Panel.

“I am excited about the opportunity to contribute to an innovative, West Australian start-up aiming to build professional equity release as a genuine compliment to other forms of retirement income and helping retirees in an effective and accessible way.”

Established in 2017, Smooth Retirement was created to assist the great number of retirees who had little or no super left and were struggling to fund the remaining years of their retirement, with just the Age Pension as their only source of income.

Smooth Retirement Managing Director and CEO Scott Phillips said the current lack of options and guidance for retirees had been the motivation to create the company.

“I was working for a large super fund and seeing all these people in real stress trying to work out how they were going to get by on the little in savings they had left.

“And all the while the family home, which was by far the greatest source of wealth for these people, was not even discussed.

“There were all these people feeling like they’d failed, feeling poor and worried yet living in homes worth $800,000 or more and it just seemed ludicrous to me.

“I wanted to find a better way and one that treated them with dignity and helped them work out the best way to access all their wealth, with proper planning, and using some of their home equity to refinance debt and / or top up their income so they could live better.”

Scott said Chris was an extremely valuable and strategic addition to the current panel of advisors, adding considerable depth and experience to the Smooth Retirement team. “We are delighted to have Chris on board and know that we will benefit enormously from his contribution,” he said.

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Scott Phillips

Equity release specialists Smooth Retirement and Pension Loans Scheme platform Pension Boost today announced they have entered into a strategic partnership.

The companies have teamed together to augment their compatible capabilities and to deliver greater value to clients through the provision of expert advice and assistance with all forms of home equity release.

Smooth Retirement and Pension Boost both provide specialist professional services to assist the growing number of income-poor, asset rich retirees to access some of the saved equity in their homes so they can improve their lifestyles and live better in retirement.

Pension Boost provides Australia’s only national independent specialist service for seniors wishing to access the Federal Government’s reverse-mortgage style Pension Loans Scheme (PLS).

Smooth Retirement delivers holistic equity release planning and broking in an all-in-one nationwide service, providing access to, and independent advice on all commercially available products and providers.

Smooth Retirement CEO and Managing Director Scott Phillips said the partnership formally recognised the commercial and ethical alignment of the two business models – both being pure fee-for-service, no commission and client-focused.

“Working with Pension Boost, we can offer a much superior and streamlined service to clients seeking equity release by identifying the best solution for them and assisting them to access it – whether that be the Government’s PLS, or commercial reverse mortgages and alternative equity release products.”

Pension Boost CEO and Founder Paul Rogan said equity release was becoming increasingly sought after by seniors who are wishing to live a better life but are ‘income poor’, noting there has been unprecedented levels of enquiry into the Pension Loans Scheme since the eligibility rules were expanded in July 2019 opening the Scheme up to vastly more seniors.

“More and more Australian retirees are looking for ways to supplement their retirement incomes and seeking assistance and advice to help them navigate their way through the often confusing and conflicting information and lengthy application process.”

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Scott Phillips

With reverse mortgages and other types of home equity release gaining in popularity, a new equity release service has entered the market.

Smooth Retirement is Australia’s first independent equity release specialists, combining equity release advice and broking in a new all-in-one service.

In addition, the Perth-based company has this week launched a new free guide for consumers and industry – the first of its kind – which explains all the available types of equity release products, their different features, varying applications as well as the pros and cons of each.

“Equity release is complex and understanding how the different products work and which one is the best for you is challenging. And while access to independent expert advice is all important when planning retirement finances, the traditional channels can be cost prohibitive, and difficult to navigate, for many retirees,” said Smooth Retirement CEO and Managing Director, Scott Phillips.

“We set about creating a specialised service that is accessible (online or via a telephone), friendly, much more affordable and one which helps retirees learn about all of their available options and what’s possible.

Mr Phillips, a former banker and financial planner, said delivering a better deal to retirees was the motivation behind the creation of Smooth Retirement.

“We’re independent and not aligned to any lenders, providers or banks and we charge fully disclosed, upfront and fair fees, taking no commissions or kickbacks from lenders.

“We work with and/or refer to all the reverse mortgage lenders and equity release providers in the country and whether it’s a reverse mortgage, the Pension Loans Scheme or a part-sale property transaction, the most important step is proper planning and making sure if you do choose to use some of your home equity now, you have enough for your later years of retirement, including your aged care needs.”

Mr Phillips said there was currently 8 equity release style products on the Australian market, with more expected to come in future years. Current providers and products include:

• Heartland Seniors Finance
• Household Capital
• IMB Bank
• DomaCom Seniors Equity Release
• HomeSafe Wealth Release
• Pension Loans Scheme (Federal Government)
• HomeStart Finance (SA)
• La Trobe Financial (Aged Care Loan)

The growth of the equity release market is being driven by the nation’s ageing population, particularly the large number of baby boomers, many of whom are asset rich yet cash poor – and also retirees who can no longer rely on returns from record low interest rates.

An increasing number of this cohort are looking for ways of boosting income, refinancing debt or accessing lump sum capital without having to sell their homes and downsize.

The Federal Government has also contributed to this renewed interest with the expansion, and essentially ‘re-launch’ of its own reverse mortgage-style offering, the Pensions Loans Scheme (PLS), in July this year.

One of Australia’s most prominent and largest reverse mortgage lenders, Heartland Seniors Finance, has experienced a significant increase in enquiry and take up of its award-winning reverse mortgage product in the last three years.

“As Australia’s leading reverse mortgage provider, we have experienced unprecedented month-on-month growth in settlements and enquiries in recent years, particularly the last two years,” said Jeff Murray, Heartland Seniors Finance, Head of Distribution.

New market entrant Household Capital has gone from strength-to-strength since launching its reverse mortgage, known as a “Household Loan”, in March this year. The company now offers Australia’s lowest interest rate at 5.15% – currently lower than the Government’s Pension Loans Scheme at 5.25%.

More than a loan, Household Capital’s model enables people to strategically deploy the otherwise dormant equity in their home in ways that boost their income steam and improve their financial position in the long-term.

Also new to the Australian market is a retiree-specific offering from fractional property investment platform DomaCom. The company’s Senior Equity Release product was launched in July. This new generation part-sale property transaction is the first equity release product to be launched as a financial product with its own PDS. Like other products on the market, it can also be used to fund any purpose, including aged care.

DomaCom CEO Arthur Naoumidis said the benefits to seniors was quite compelling, with one of the biggest advantages being that the product was not postcode restrictive.

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Montgomery is a Sydney-based boutique funds management business focused on disciplined long term investing outcomes for its retail, HNW, adviser and institutional clients.

The Montgomery Fund aims to achieve long term capital and income growth through investment in equities across both Australian and New Zealand businesses.

The Fund is focused on protecting investor’s capital through the use of proprietary quality measures, buying businesses at a discount to intrinsic value and having the flexibility to hold unconventionally large amounts of cash when opportunities aren’t widely available.

The approach has proven to provide capital preservation and downside protection in falling markets – an attractive proposition for investors in the current market environment.

Montgomery Head of Distribution Scott Phillips said: “The Fund has been focused on delivering precisely what clients have asked for – solid out-performance over the market, with the ability to protect investors capital on the downside – and this approach is now finding great support among a growing number of financial advisers.”

“The other attractive proposition for clients is that the fund has captured more than 95% of the upside in any month the market has risen and just 48% of the downside in any month the market has fallen. This is what many investors are looking for.”

Montgomery CIO Roger Montgomery said: “Our focus has been to invest in high quality companies that can reliably grow income rather than conventional blue chip businesses. This is in stark contrast to the wisdom of investing in large, high dividend yielding companies.”

“The Fund has an ‘All Cap’ approach and is prepared to hold cash. A lack of high quality investment candidates, or a declining margin of safety, will produce an increase in cash to protect investors’ wealth, and this can rise as high as 30% of the portfolio. Capital preservation is as important to us as it is to our clients.”

The Montgomery Fund, launched in August 2012, has out-performed the market by 11.19% over the last 12 months. Since inception it has out-performed the S&P/ASX 300 Accumulation Index by 6.93 per cent per annum post fees.

The Fund is available on many platforms including; BT Wrap, Macquarie Wrap, Asgard, netwealth, Colonial FirstWrap, HUB24, OneVue & North.

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Sue McCarrey

Long standing public sector financial advice specialist, State Super Financial Services (SSFS), yesterday announced that it has opened its doors in Perth.

With the aim of serving public servants and the broader community in Western Australia, SSFS’s new office was opened by Sue McCarrey, President of the Institute of Public Administration Australia (IPAA).

Michael Monaghan, Managing Director of SSFS, said demand for specialist public sector advice was the driving force behind the decision to commit resources and extend SSFS’s proven capabilities into Western Australia.

“Our move into Western Australia is very much in line with our focus on making public sector advice more accessible to public sector super fund members and it is also a reflection of our continued growth nationally. SSFS has a strong track record of providing specialised financial advice and this new office will allow us to better serve our Western Australian-based clients, with expert local knowledge and local operations,” said Mr Monaghan.

Scott Phillips, State Manager of SSFS in Western Australia, will lead the office as well as the team of ten, all recruited from the local area.

Mr Phillips said that SSFS had identified a growing need in the market for specialist public sector-focused financial advice in Western Australia and that his team were looking forward to sharing their experience and expertise with members.

“Navigating the complexities of defined benefit schemes and maximising entitlements during events such as retirement or redundancy is challenging,” he said, “so having a public sector specialist in your corner can be very reassuring and can definitely make the process far less daunting.”

In addition to face-to-face advice, public sector super fund members will also have access to a highly innovative and recently launched telephone-based advice service designed to support the operations of the Perth office and service the broader public sector market in WA.

“Our telephone based advice service is specific to the individual’s defined benefit super account which helps them understand their choices and make better decisions,” Mr Phillips explained, “This is normally advice that had to be done face-to-face and in an environment where not all members have the time or ability to make a face-to-face meeting, we’ve innovated to provide elements one would expect from a high quality adviser but done with a skilled adviser by phone”.

Mr Monaghan concluded by explaining that the dual initiatives of the Perth office and the telephone-based advice service reflect the significance that SSFS places on providing easy-to-access, expert advice to current and prospective members.

“Our aim is that when public sector employees in WA need financial advice, they will think of SSFS and avail themselves of the expert and now locally based advice on offer. We look forward to hosting them at our offices” he said.

The new office is located at Level 3, 197 St Georges Terrace, Perth WA 6000.

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