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How does a Household Loan Work?
What is a Household Loan?
A Household Loan is our innovative approach to borrowing against home equity for responsible, long-term, retirement funding. It is a type of reverse mortgage.
A reverse mortgage allows you to borrow money using the equity in your home as security. Interest is charged like any other loan, but you don’t need to make repayments while you live in your home. The loan must be repaid in full when you sell or leave your home or, in most cases, if you move into residential aged care.
Please see the Reverse Mortgage Information Statement for more information.
To find out more about reverse mortgages, including a reverse mortgage calculator to help you work out how much equity you may have in the future, visit the Australian Securities and Investments Commission’s free consumer website at www.moneysmart.gov.au.
What protections does a Household Loan provide?
A Household Loan is a type of reverse mortgage, so you benefit from key structural and legislative protections.Ownership
- You remain the owner of your home (and benefit from any increase in property value)
- You can stay in your home for as long as you want to.
- There is no requirement for you to make periodic loan repayments (although you can do so at any time without penalty). The loan becomes repayable when you leave your home.
- You cannot end up owing us more than your home is worth.
What is the interest rate and fees?
The interest rate on a Household Loan is 4.95%p.a. (4.98%p.a. comparison rate*), which is the lowest available rate for a reverse mortgage or equity release product.
Household Capital charges an Establishment Flat Fee (including valuation and conveyancing) of $950.
Will my Age Pension be affected?
The Age Pension is an important source of income for many retired Australians. We can work with you to understand how a Household Loan can be used to preserve your pension entitlements and always recommend you speak to Centrelink to ensure your entitlements aren't affected.