1st Generation Products
Our design principles
The 1st Generation of Futureproof products are 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 released by Futureproof is the Equity Preservation Mortgage™.
This new smart mortgage can 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™ uses 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™ uses 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™ uses 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™ uses 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™ uses 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™ uses 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™ uses 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™ uses 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.
In addition to the described financial outcomes, each of the above Futureproof products delivers 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
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
There are 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
- 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.