Frequently asked questions
Below you will find answers to the questions we hear most. If you can’t find what you’re looking for here or elsewhere on our website, please contact us and we’ll be happy to help you.
Smooth Retirement is a specialist service providing expert equity release advice, planning and broking Australia-wide. Our service is aimed at assisting Australian retirees to live financially better in retirement, while remaining in their own homes. We’ve created smart technology – so we can help you decide if equity release is right for you and then create the best strategy to meet your goals for all the years of your retirement. Our unique service is government regulated and totally independent, so you have peace of mind as we guide you through clear and simple steps.
Smooth Retirement offers many benefits, including:
- Specialist retirement income and funding advice that allows you to fully understand and take control of your financial situation in the short and long term.
- Ability to look forward and plan, with peace of mind, how you will provide for all of your retirement years.
- Access to funds at a time when you need them most, and when you are unlikely to qualify for any other loan.
- Ability to refinance an existing mortgage or other debt(s), so you can use all your available retirement income to live better and not to repay debt.
- An alternative to downsizing so you can stay in your home for as long as you choose and sell only when you are ready. Ability to set aside funding for inheritances or aged care, well ahead of time.
- More options and greater choices to meet your retirement goals.
Everyone’s situation is different, and our fees are based on the complexity of your situation and the advice that we create for you.
You’ll know in detail all our costs – plus any additional costs that might be charged by the lenders and authorities – before you commit to anything!
Our consultation service is FREE of charge, with NO obligation and NO pressure to commit or join up.
We provide highly specialised equity release advice and a complete personalised plan to help you achieve your retirement income goals. This includes a recommendation of the best reverse mortgage or equity release product for you as well as detailed information on why other available products were not deemed suitable for your retirement goals – a service not readily available from lenders, planners and brokers.
Our support and education service is ongoing and includes up-to-date information on government and regulatory changes that may impact on your retirement situation, information on new products as and when they come to market and the option of an annual review to ensure you always have the best available solution to meet your needs – particularly as they change over the years.
Your fee includes:
- Initial free consultation – no obligation or pressure.
- Analysis of all your current sources of income and assets.
- Assessment of your eligibility for equity release/reverse mortgage. Modelling (using smart tech) of how equity release/reverse mortgage could work for you.
- Calculation and demonstration of your current and future position.
- Calculation of how much you need to do the things you want to do.
- Recommendation of the best solution ( a mix of options), the critical step that’s almost impossible to do on your own.
- Long-term projections of your THREE main choices – status quo (do nothing), austerity (cut back and save), OR use a reverse mortgage/equity release to meet your goals.
- Modelling and comparison of equity release/reverse mortgage products to determine the best one for you.
- Guidance and assistance with the loan (credit) application.
- Guidance and assistance with the legal sign off process.
- Ongoing education and information.
- Flexibility to make changes and review your situation as needed.
- Optional annual review, to make sure you’re on track and the credit product you have is still the best for you.
- Commitment to you to review all new equity release products that come to market, and if we find something better, we offer you the option of changing and getting a better deal.
Smooth Retirement is full regulated and 100% committed to acting in your best interests. Our people and our services are fully compliant with Australian financial services regulations.
The privacy and security of your personal information is of vital importance to us and is handled, stored and protected by us in accordance with the Privacy Act 1988 (Cth), Australian Privacy Principles and General Data Protection Regulation. To find out more, click here. To find out more, click here.
With the right advice, there may be no impact on your Age Pension entitlements. Our financial modelling can also ensure that you are receiving the right amount of Age Pension. Some of our recommended solutions may even enhance your payments.
About Reverse Mortgages
A reverse mortgage is a loan designed specifically for seniors who own, or mostly own, their own homes. Unlike other types of loans, there are no regular repayments. You retain ownership of your home and remain living in it. The debt is repaid from the future sale of the home, which is generally when downsizing later in retirement or making the move into aged care.
If you are over the age of 60, own (or largely own) your own home and live in a major Australian city or large regional centre, you have already met some of the main eligibility criteria.
A reverse mortgage is the most popular type of equity release product available in Australia. Other equity release products on the market are sometimes called home reversion products. Both types allow you to release some of the wealth contained in your home, but there are some important differences.
Reverse mortgages allow you to borrow funds against the value of your home, with no regular repayments required. The loan is repaid from the future sale of the property, usually when you downsize later in retirement or move into aged care. Importantly, you retain ownership of your home and remain living in it.
Equity release products are not loans. Rather, they are part-sale property transactions. Instead of borrowing against the value of the home, you agree to sell a portion of your home in exchange for lump sum capital. As with reverse mortgages, you continue to own your home and remain living in it, but don’t have any interest capitalising on the debt.
In addition to our fees, there are other costs associated with taking out a reverse mortgage that must be paid by you if you decide to proceed.
- Loan establishment fee: paid to the lender (this can range between $395 and 1.5% of an approved loan amount i.e. $1,500 for a $100,000 facility).
- Legal advice: a lawyer’s sign-off is required by the lender (this can range between $200 and $800).
- Government costs associated with the lender registering its interest in the property that is offered by the client as security for the loan, or its interest in the property (approx. $200).
- Valuation costs that may be required by the lender (typically between $200 and $600, or more if the property is over $2M).
- Some lenders may charge an annual fee of around $80.
Note: Smooth Retirement distributes loan products on behalf of lenders, and there may be an initial and then subsequent loan term(s), such as 10 years for a regular (monthly) advance. If the loan is to be renewed, ie. for a further term of 10 years, the lender(s) may require a valuation on the security property, which may come at a cost to the client.
You can change your mind and sell your home at any time without incurring any exit fees or penalties from the lender.
The No Negative Equity Guarantee (NNEG) was introduced in 2012 by the Australian Government. It is a law that protect reverse mortgage borrowers from owing lenders more than their home is worth. This means that regardless of what happens to the value of a property, the borrower is not liable. If a property is sold for less that is to the lender owed, the reverse mortgage lender has to wear the loss.
Interest compounds when you pay interest on your interest and any fees and charges that are added to the loan over time. This means that the longer you have the loan, the greater the amount you will have to pay back to the lender when the house is sold.
Not true. Australian borrowers are protected by law, known as the No Negative Equity Guarantee (NNEG), and cannot owe lenders more than their home is worth, regardless of what happens to the value of their property.
No. Unlike a traditional home loan, reverse mortgage borrowers retain ownership of their homes, and the title remains in the name of the borrower. This means you cannot lose ownership of your home.*
No. Australian borrowers are protected by the No Removal Guarantee, which means you cannot be removed from your home by the lender.*
Under the No Forced Sale Guarantee, a borrower cannot be forced to sell their home, at any time, against their will. Even if their home devalues dramatically, the borrower can continue to live in it for as long as they choose, repaying the lender only when the house is sold in the future.*
A reverse mortgage can be an extremely valuable and powerful retirement planning tool that can greatly increase income and capital in retirement when used sensibly and as party of a retirement-long strategy.
In its most recent review (August 2018), ASIC found that reverse mortgages could help retirees fund a better quality of life and reduce financial stress, but some borrowers did not fully understand the effects of compound interest on their loans and how this could impact their future needs. The regulator believes that there will be greater demand for reverse mortgages in the future with more products released to the market as Australia’s population ages.
While using some capital now will reduce the amount of equity you have in your home over time, with good planning you can make sure you have enough in later years to fund aged care and your children’s inheritance.
Reverse mortgages are tightly regulated and like all banking products, this includes measures to protect vulnerable clients. These loans are also subject to stringent lending criteria. All applicants must prove that they have adequate equity in their home and are able to keep their property properly insured and maintained throughout the life of the loan. They are also all required by law to seek independent legal advice.
There is a significant financial cost to selling a home, not to mention an emotional one – with the vast majority of retirees (83%) stating they wish to age in place. Selling up can also impact significantly on the amount of pension you are eligible to receive going forward.
*Terms and conditions apply and you will have responsibilities that you are required to meet under the contract.
About Equity Releases
Equity release products refer to non-loan products such as home reversion and fractional property transactions. They are designed to provide seniors with debt-free funding in retirement.
Instead of borrowing against the value of your home, you can agree to sell a portion of your home / or a portion of the future sale proceeds of your home in exchange for money now. The advantage is that there is no capitalising interest. You continue to own your own home and remain living in it with no obligation to sell until you choose. Other terms and conditions apply, and it is our job to ensure that our clients understand all of the details about the option that we recommend.
In addition to our fees, there are other costs associated with taking out an equity release facility. These vary from product to product but may include:
- Application/one-off documentation fees (from $700 to $1,800 est).
- Service fees: a percentage of the total lump sum amount (up to 4.4% est).
- Legal advice fees which vary from state-to-state ($200 to $800 est).
- Government charges including property searches, registration fees (up to $200 est).
- Termination fees/break cost (up to $2,000 est).
Home reversion products allow you to access some of the money tied up in the value of your home, without creating a debt. They are not a loan but a property contract. Instead of borrowing against the value of your home, you agree to sell a portion of the future sale proceeds of your home – generally at a discounted rate – in exchange for a lump sum of money now.
A fractional property transaction allows you to access some of the value of your home now without creating a debt. New to Australia, this new financial product allows you to sell a percentage of your property to an investor (via a provider) in exchange for a lump sum now or a staggered payment plan into the future. The funds can be used for any purpose and you retain a portion of title to your property, and lifetime occupancy.
No. You retain ownership of the majority of your home – and the right to reside there – and you cannot be forced to sell or move against your will.*
Not true. You continue to live in your home until it is sold some time in the future and cannot be removed against your will by the provider.*
No. Equity release products such as home reversion and fractional property transactions are part-sale arrangements and therefore do not accrue interest nor create debt.
Not true. No repayments are required from you. The provider is paid their share of your home when the property is sold.
*Terms and conditions apply and you will have responsibilities that you are required to meet under the contract.