Financial advisers now have an additional solution for managing the cash flow needs of older clients, using their homes to develop and implement strategies for retirement.
Fractional property investor DomaCom has received relief from ASIC to enable to delivery of its newly-developed reverse mortgage lending product.
DomaCom has received a decision in principle from the regulator to approve the relief to allow the Senior Equity Release product - subject to a number of conditions - as well as lay foundations for the introduction of further retirement products.
With plans to launch the SER product in early-2018, the decision by ASIC brings a close to a four-and-a-half year battle between DomaCom and the corporate watchdog.
DomaCom chief executive Arthur Naoumidis said the product, which allows retirees to sell part of their home while remaining in it, has the potential to be a meaningful solution to Australia's growing issue of retirement self-funding and can also be used to facilitate intergenerational wealth strategies.
"Many retirees are asset rich and cash poor; this product will enable them to unlock the value of their home while also giving them control and the ability to remain living in their home," Naoumidis said.
"This is a key milestone for DomaCom, paving the way for a series of new products based on the equity release concept and with the potential to significantly build funds under management."
Naoumidis believes the demand for reverse mortgage lending products is enormous as the range of available alternative products continues to diminish.
DomaCom said it expects its SER product will be structured as a financial product, complete with Product Disclosure Statement, and will require a financial adviser or planner to provide advice to those wishing to participate. It is also likely that potential clients will be required to obtain legal advice and comply with other provisions currently applicable under the National Credit Act.
Retirees will be protected, with the DomaCom SER product providing security that they can remain in their home as long as they wish. They will also be provided the right to repurchase the equity that has been sold if they change their mind.