Home equity product’s fast cash

The firm, backed by British insurer Legal & General, industry super funds-backed ME Bank, rich-lister barrister Allan Myers, former Macquarie Group executive Jim Miller and former federal super minister Nick Sherry, allows retirees to use equity in the family home to fund their retirement expenses.

Its “rapid access contingency” $20,000 home equity offer fast-tracks applications to make the funds available within two weeks.

Household Capital chief executive Josh Funder said regular interest repayments were not required and applicants could repay at any time without penalty.

The funding would be a boost for retirees facing income loss due to falling dividends, term deposit rates and rental income, he said.

“We all know retirees are doing it tough and facing reduced incomes due to shrinking super balances and investments,’’ Mr Funder said.

“The government stimulus package focused on working Australians and while the banks have provided interest repayment holidays, none of that has helped retired Australians get through the crisis.”

Applications for the federal government’s Pension Loans Scheme must go through Centrelink, with estimated wait times of up to nine months and payments in twice-monthly instalments.

Household Capital will also launch on Wednesday what it calls the “Home Income” offer, a regular drawdown on home equity to allow retirees to maintain their retirement lifestyles.

Garry Weaven, the former chairman and founder of IFM Investors and former chairman of Industry Super, is chairman of the advisory board of Household Capital, which has established a $100m wholesale debt facility to provide funding for home equity.

Reverse mortgages, where homeowners borrow against equity in their property, typically for short-term reasons, have been heavily scrutinised by regulators.

But Household Capital claims to use sophisticated algorithms to combine a retiree’s home equity, superannuation and age pension to provide a full, long-term picture of a borrower’s financial profile.

L&G’s this year bought a 20 per cent stake in Household Capital by anchoring an $18m Series B financing for the Australian firm, which also introduced Computer Power Group founder Roger Allen as an investor.

Mr Allen built Computer Power, which counted Rupert Murdoch as its largest investor, into one of Australia’s first global IT computer businesses.

L&G’s move increased to $25m the equity capital raised by Household Capital since 2017.