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The new loan is based on a reverse mortgage product and offers a lower interest rate with a simplified application process.
Specialist mortgage lender Household Capital has launched a refinancing loan for retired borrowers.
The financial services firm, which focuses on lending options for the over-60s, said the new product was based on its full-featured reverse mortgage, the Household Loan.
Household Capital described Retirement Refi as a ‘streamlined loan’ that offers a lower interest rate and a simplified application process.
The loan is designed to refinance an existing mortgage and provides a small additional ‘contingency fund’ to help with future unexpected retirement expenses.
Retirement Refi is available exclusively via mortgage brokers and is the only Australian home loan designed for the over-60s, Household Capital said.
The company’s lending products are available exclusively via brokers on several broker panels, including Finsure, LMG, SFG, and YBR.
Household Capital said that more than 2 million Australians in their 60s carry mortgage debt, a number that it said would continue to grow.
“Some of those individuals are approaching retirement, others already retired – sometimes not by choice. For many, trying to juggle repayments on even a modest home loan alongside the rising cost of living is challenging,” the company said.
Household Capital’s head of broker distribution, Shelley Wettenhall, said: “As Australians transition from working life to retirement, there are few options for people carrying the burden of regular repayments.
“For many, the end result of having to make mortgage repayments in their 60s is a compromised lifestyle.
“Our Retirement Refi has been designed to meet the needs of this group; it allows the over 60s to repay their home loan with a reverse mortgage product that removes the need to make regular repayments and frees up their cash flow.
“While our Retirement Refi is not for everyone, it is for many. It gives brokers the opportunity to retain and attract older clients and gives those clients the ability to free up their cash flow to enjoy freedom and choice in retirement.”
Increasing numbers of Australians are heading into retirement with mortgage debt.
The average household debt for those aged 55–64 has risen to close to $250,000, up from $156,000 in 2011–12, according to the Australian Bureau of Statistics (ABS).
That trend could worsen, with financial services firm AMP’s research showing that nine in 10 Australians over 50 expect to still be paying off a mortgage in retirement.
More Australians are also turning to reverse mortgages to ease income pressures in older age, with brokers reporting a growing volume of inquiries and demand for reverse mortgages.
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