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Household Capital fast tracks funds for retirees in need

Josh Funder   CEO - Household Capital
May 20, 2020 2 MIN

May 2020: Retirees facing financial shortfalls will be able to apply for ‘accelerated access’ to draw on their home equity, after independent specialist retirement funding provider Household Capital overhauled its product features and application process to meet the needs of senior Australians during the COVID pandemic.

Household Capital today announced the ‘rapid access contingency’ $20,000 home equity offer to deliver financial assistance more rapidly to the thousands of retirees hit hard by the global economic downturn. The company also announced the Household Capital Home Income, a regular drawdown on home equity to allow retirees to maintain their retirement lifestyles.

Household Capital chief executive Josh Funder said the rapid funding would provide a financial boost for retirees facing a loss of income due to falling dividends, term deposit rates and rental income.
“We know retirees are doing it tough and facing reduced incomes due to shrinking super balances and investments.” “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.”

“Stepping up to offer $20,000 to cover living expenses or help out kids or grandkids who have lost jobs in the pandemic is the right thing to do, at the right time,” Funder said.
Applications for the $20,000 finance package and Home Income will be fast tracked, with the funds typically available within two weeks. Regular interest repayments are not required, and applicants can pay back the money at any time without financial penalty. In contrast, applications for the Federal Government’s Pension Loans Scheme must be made through Centrelink, with estimated wait times of up to nine months, and payments only available in twice-monthly instalments.

“We don’t want people to have to wait – they need access to their savings to meet their current needs as well as fund their long-term retirement,” said Funder.
“Smaller loans like these are not profitable to originate in a business sense, but we view it as a service to make sure Australian retirees have access to their savings when they really need them.” Home equity is the third pillar of retirement funding. Drawing on home equity when other sources of income are reduced is a sensible option when you consider most Australian retires have much more saved in their homes than in their super or investments.

In total, Australian retirees have $1 trillion tied up in home equity. Freeing up some of those funds from their largest retirement asset enables them to continue to live well in their own home and, just as importantly, in their community.

“We have certainly experienced a surge in inquiries in the last couple of months, so I think retirees who are now spending more time at home than ever are realising the value of their home, seeing where they can make improvements or accommodate their future ageing needs, so they can remain in their home for longer,” said Funder.

“It’s becoming clear to retired Australians that their homes are both the best place to live as well as the best way to fund their retirement.”

Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available on request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434. Australian Credit Licence 391876.

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Call us free today for a chat on   1300 622 100

Australian retirees have inadequate access to their savings

Josh Funder   CEO - Household Capital
March 6, 2019 3 MIN

06 March 2019:

Household Capital, an independent, specialist retirement funding provider, has announced it has entered the Australian retirement sector with an innovative loan product that allows retirees to use equity in the family home to fund retirement expenses, enhance income or provide financial support to their children and other family members.

Household Capital provides Australian home owners access to additional retirement funds by using a low interest rate loan to transfer a portion of the value of their homes into their superannuation fund or an investment account. Those who access the loan have guaranteed lifelong occupancy of their home and never have to repay more than the value of their home.

The Household Loan is designed to meet the needs of Australian retirees by allowing them to balance their savings, continue to grow their assets during retirement, and harvest a sustainable income from their investments.

Joshua Funder, Chief Executive Officer of Household Capital, said Australians were living longer but many did not have enough super savings to provide sufficient income throughout retirement.

“Retirees want to stay at home, but many are struggling to make ends meet as they age,” Mr Funder said. “Our goal is to deliver a values-based service to help Australian retirees Live Well At Home.

“We combine a retiree’s home equity, superannuation and aged pension to provide adequate, reliable, lifelong retirement funding while the retiree continues to live at home.

“It provides responsible and flexible access to lifetime savings, allowing retirees to make sound economic and lifestyle choices.”

There is currently over $900 billion in untapped home equity owned by Australian retirees, with approximately 80% of retirees owning their own home.

Yet the average retiree’s super balance lasts only 10-15 years into retirement, leaving many Australians living on inadequate income or reliant on the age pension in their final years.

The Household Loan allows retirees to access their home equity to:

  • Enhance retirement income delivered through superannuation or investment accounts
  • Pay for home renovations throughout retirement
  • Fund in-home health and aged-care costs
  • Support other family members with first home deposits and education expenses
  • Fund the transition to supported aged care accommodation
  • Refinance home loans where repayments reduce retirement income
  • Guarantee lifetime home occupancy.

Competitive rates

Household Capital has accessed wholesale funding to offer customers highly competitive interest rates, significantly lower than those previously charged by the banks.

Household Capital does not pay commission or trailing commission to brokers and there are no ‘break costs’ or hidden fees. Instead, Household Capital’s financial services are delivered alongside superannuation funds or financial advisers to fit each retiree’s specific needs.

Household Capital receives an establishment fee to cover the costs of putting the loan in place and interest is charged on the capital drawn from a person’s home. The final amount is paid when the person leaves the home and the house is sold.

Mr Funder said Household Capital’s proposition appealed to a broad range of home owners because it was suitable for all stages of retirement. “Household Capital’s loan is suitable for people approaching retirement who have a low superannuation balance that needs a boost,” Mr Funder said. “It also works for those people in midretirement who may have depleted their superannuation and need more income, as well as those retirees who may need funding for the transition to supported care.”

Broader economic benefits

Nick Sherry, Household Capital Chair and former Federal Minister for Superannuation, said governments around the world were struggling with the dilemma of ageing populations and smaller workforces – at a time when the costs of healthcare, aged care and pensions are increasing.

With Australia’s median household superannuation balance at retirement currently around $200,000 and the median value of home ownership at retirement $700,000 – Household Capital’s offering potentially releases billions of dollars into the economy to meet the real needs of retirees and their families, Mr Sherry said.

“For many Australians, ageing in the home you’ve been living in helps maintain family and community networks and use of local services,” Mr Sherry said. “Selling the family home can result in loss of entitlement to the aged pension and the cost of buying and moving to a new home can mean significant loss of capital.

“We want to make a significant positive impact on the wellbeing of retired Australians. The substantial savings held by Australians in their family homes is a largely untapped resource that can be better utilised to help retirees live well at home.”

Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available on request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434. Australian Credit Licence 391876.

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Call us free today for a chat on   1300 622 100