Justin Greiner
Greenway Capital is set to launch an equity mortgage product into the market that will allow the family home to be used in a more flexible manner to help consumers achieve their financial goals.
The product will provide consumers with capital ideally to the value of 30 to 40 per cent of the total value of their home without the burden of repayment until the property is either refinanced or sold.
No interest is included as part of the arrangement, with Greenway accepting a share of the capital gain materialised on the sale of the property instead. This share can be anywhere between 30 and 50 per cent.
“There’s tremendous flexibility in this product. You can use it as a standalone product, or you can package it up with a traditional interest charging mortgage,” explained Greenway head of distribution Justin Greiner.
Greenway has specifically targeted four segments of the consumer market to which it will pitch its product.
These include consumers who want to rid themselves of mortgage repayments in order to use their funds for other purposes, people wanting to upgrade their home while keeping their debt repayment obligations at the same level, people looking to boost their wealth creation activities by freeing up capital in their home, and retirees looking to supplement their potentially inadequate retirement savings.
In the event that the sale of the mortgaged property returns a capital loss, the product takes the form of an interest free loan, with only the original principal requiring repayment.
Greenway has been selective in the distribution channels it has selected for its equity mortgage.
“The key to this product is to make sure you’ve got properly trained and accredited distributors. To become accredited in the Greenway product we’re talking about accreditation that might take two or three hours, as opposed to a traditional accreditation for a fund that might take 45 minutes,” Greiner said.
The property finance firm has also been conscious of consumer protection issues in formulating the offering.
“Legal advice will be required [before taking out the product], and financial advice will be required to release equity. That’s a standard that doesn’t currently exist in the space,” Greiner said.
To that end, Greenway is ensuring its equity mortgage complies with the Senior Australians Equity Release Association of Lenders’ code of conduct due to the equity release nature of the offering.
