1st Generation Products

Our design principles

The 1st Generation of Futureproof products will be under-pinned by the Equity Preservation Mortgage™.

The key design principles we apply, are:

  • these are mortgage products (not investment products)
  • put Customer needs at the centre of product design
  • develop a range of  products each meeting specific funding requirements of the ageing population
  • deliver real economic value to Customers
  • financial products must be ethical & fiscally responsible
  • remove investment risk, capital risk & interest rate risk for the Borrower
  • remove negative equity risk, credit risk &  investment risk for the Lender
  • lower risk weighting under BASEL II & III and SOLVENCY II protocols
  • more efficient use by Lender of Tier One capital to write new mortgage products
  • products that deliver higher return on bank assets to increase profitability of the Lender 

How to use our smart mortgages

The initial smart mortgage, soon to be released by Futureproof, is the Equity Preservation Mortgage™

This new smart mortgage will be able to be utilized in three different ways:

  • offer the standard range of Futureproof products
  • integrate into new bespoke financial products as the product funding mechanism
  • bundle as the payment engine with legacy products or even third party products 

Category killer products

Futureproof Income™ will use the Equity Preservation Mortgage™ as the funding engine to deliver additional  fixed-term income to Pre-retirees of any age.

Example: a Pre-retiree with an average property of the median house value of $750,000 can obtain up to $25,000 p.a. in tax-free annuity income for 15 years.

 

Futureproof Superannuation™ will use  the Equity Preservation Mortgage™ as the funding engine to deliver tax-free income directed into the member’s superannuation account, as voluntary contributions.

Example: a 40 year old Pre-retiree having an average property of the median value of $750,000  will add $1M to his or her superannuation balance by retirement age.

Futureproof Pension™ will use the Equity Preservation Mortgage™ as the funding engine to fund or purchase a deferred annuity. 

Example: a 40 year old Pre-retiree having an average property of median value of $750,000 may fund the purchase of a deferred annuity to provide up to $25,000 p.a. income from retirement age.

Futureproof Retirement™ will use the Equity Preservation Mortgage™ as the funding engine to deliver annuity income in retirement.

Example: a Retiree with an average property for seniors at $1.1M can obtain up to $36,000 p.a. in tax-free annuity income for up 15 years (or longer for smaller annuity amounts). 

Futureproof Investment™ will use the Equity Preservation Mortgage™ as the funding engine for the purchase of an investment property which is fully paid-off by retirement age.

Example: a 40 year old self-employed Pre-retiree or small business owner (usually having no superannuation) with an average property of median value of $750,000 may fully fund the purchase of a new 1 bedroom investment.

Futureproof Aged Care™ will use the Equity Preservation  Mortgage™ as the funding engine to pay for aged care weekly charges.

Example: a Retiree with a property of the average value for seniors at $1.1M will preserve that equity for the refundable bond for low-care or high-care accommodation, should it be needed, and also pay up to $700 per week for aged care fees.

 

Futureproof Family Assistance™ will use the Equity Preservation  Mortgage™ to fund gifting to family members.

Example: a Retiree with an average property of the average value for seniors at $1.1M is able to gift a $110,000 lump sum to a grandchild to assist a home purchase and also pay up to $25,000 p.a. to another grandchild to pay university or college fees.

 

Futureproof Wealth™ will use the Equity Preservation Mortgage™ as the funding engine to increase rental yield on each investment property or buy-to-let currently held by the Customer.

Example: high net worth investors owning an unencumbered one-bedroom rental property of median valued at $750,000 can secure a supplementary tax-free income stream (in addition to their existing rental income of $480 per week) from that property of up to $25,000 p.a. thereby doubling their existing rental yield.

Explanatory notes

Additional Benefits

In addition to the described financial outcomes, each of the above Futureproof products will deliver the following additional benefits to the Customer:

  • All loan interest is paid on behalf of the Borrower
  • Mortgage insurance protection is standard and premium paid on behalf of Borrower
  • All existing home equity is protected and guaranteed
  • By the end of the loan term, all loan principal will have been returned to the Borrower

Important Notes

Each of the above Futureproof product examples:

  • are an average Customer only
  • has no upper limit on property value provided it is supported by a property valuation
  • delivers superior financial outcomes that no other equity release product can match 
  • achieves these financial outcomes with no adverse cashflow impact or tax effect on the Customer
  • maximum annuity amount is equivalent to a 50% loan-to-value ratio 
  • maximum total borrowing is equivalent to an 80% loan-to-value ratio 
  • maximum lump sum (if any) is equivalent to a 10% loan-to-value ratio

Customer Costs

There will be no hidden or additional costs.

The only costs incurred by the Customer in the examples above are:

  • loan application fee
  • stamp duty
  • standard legal costs for the mortgage transaction
  • break costs where early termination of the mortgage occurs

Risks

No well-designed fiscally-responsible retirement funding product should:
 
  • deplete home equity to the point where there is insufficient to pay aged care accommodation bonds
  • expose a retiree to financial risks in retirement

Self-insuring these risks in order to secure retirement income is not a retirement strategy – it’s a recipe for personal distress and financial disaster.

A fundamental difference of the Equity Preservation Mortgage™ is that the Borrower will not be exposed to equity depletion risk, interest rate risk, capital risk or investment risk.

Contact us for more information about the soon-to-be released Equity Preservation Mortgage™ and Futureproof products.