A new fifth pillar of retirement funding – Home Capital

Futureproof has developed a wealth product for the self-employed, enabling them to build an investment property portfolio ahead of retirement at no cost and without any personal cashflow impact.

Futureproof uses its new Equity Preservation Mortgage® to monetize home capital in the family home to fund the purchase of an investment property, with no depletion of home equity.

This leaves the traditional fourth retirement funding pillar of existing home equity intact for future needs, whilst creating an entirely new fifth pillar of retirement funding.

Futureproof Wealth™

Futureproof Wealth™ is a  Futureproof product that uses our Equity Preservation Mortgage®  to fund the purchase of a brand new investment property, for Pre-retirees of any age.

We achieve this through:

• the Principal + Interest version of our new mortgage
• lump sum + annuity drawdown
• longer minimum loan term

This unique Futureproof product:

• pays all loan interest on behalf of the Borrower
• delivers a lump sum used to fund the unit deposit + stamp duty
• delivers a tax-free annuity income stream which, with the rental income, is calculated to fully fund the loan principal repayments

Pre-retirees having a home valued at the median house price of $750,000 can fund the purchase of a $500,000 1 bedroom investment unit at no cost, by monetizing their home equity into home capital using the Equity Preservation Mortgage®.

If a Pre-retiree has a higher value home of, say, $1.1M then they can fund the purchase of a 2 bedroom investment unit.

There are no limits on home value, loan size or age of the Borrower. 

The Pre-retiree has now put home capital to work to generate new retirement wealth, with no depletion of equity (all existing home equity is guaranteed and all future equity growth during the loan term from capital appreciation is preserved), at no cost to them, without adverse tax consequences and with no personal cashflow impact whatsoever. 

Our Equity Preservation Mortgage® changes everything for self-employed Pre-retirees.

Example: 

For an average Pre-retiree who is self-employed:

• aged 40 years
• family home valued at $750,000 (median house price for capital cities)

The Futureproof Wealth™ product uses an 80% LTV or LVR Equity Preservation Mortgage® over the family home to fund:

• deposit of $50,000
• stamp duty + legals + mortgage insurance of $20,000
• annuity income to part-pay loan repayments of $1,250 per month
• rental income to part-pay the balance of loan repayment of $1,400 per month

At retirement age, this Pre-retiree has a fully paid-off  a 1-bedroom investment unit which, at current rates of property appreciation, would add $1.3M in real property assets to their retirement wealth.

[This example ignores the additional negative gearing tax benefits that may be available to the Pre-retiree depending upon individual circumstances.]