Alan Kohler on Household Capital and its approach to home equity:
“What’s different about it? Well, it’s a lower LVR and it’s a wholesale funding line from ME Bank, which means that the interest rate is lower than the normal reverse mortgage, it’s 5.9%. It’s still obviously a higher interest rate than a normal mortgage but because the money is leant and not repayable until the end and the interest capitalises, these sort of things are always higher interest rates and they have to be.
But it is an interesting way to access home equity, for whatever reason you need it for. They’re suggesting you put the money into super so that it earns as much as 5.9% to in effect pay the interest on it. The business has got some substance to it.
It’s got some interesting people behind it including the former Minister for Superannuation, Nick Sherry, who’s the Chair of the board, and my old friend, Bob Officer, is on the advisory board, and there are a few other interesting people behind it. I think it’s worth knowing about. I don’t know whether you are a potential customer of a reverse mortgage provider, but I think it might be something you might want to think about.”