Lifestyle <sup>CAPITAL</sup>

Lifestyle CAPITAL

A Lifestyle CAPITAL land lease home loan accesses your home’s equity, supplementing your retirement income with no repayments until you vacate or sell your home. As you don't need to make regular repayments while you live in your home, the interest on your loan compounds. Having met our loan approval criteria, you could supplement your retirement income with a fortnightly income stream using your Lifestyle CAPITAL land lease home loan.

Your loan amount depends on your age and the value of your land lease home, but the older you are, the greater your borrowing power. The minimum age to qualify for a Lifestyle CAPITAL land lease home loan is 65 with a maximum amount being 15% of the value of your home. This increases by 1% for every year over 65 to a cap of 25% when you are 75 and above, to a maximum of $150,000. There is no maximum age.

A Lifestyle CAPITAL land lease home loan is a reverse mortgage with consumer protections where the borrower retains ownership of their home; guaranteed lifetime occupancy; and the ‘no negative equity guarantee’. So, you’ll never owe more than the house is worth. Your new lease on life with real peace of mind.

A lump sum payment can also be approved for a personal-use asset - to give you an added lease on life - including a car, caravan, boat, home improvements, medical costs or debt consolidation with a commensurate reduction in credit limits.

Sally’s home is valued at $435,000.

Sally is on the full aged pension and seeking to top up her income to provide flexibility with her daily expenses and transform her retirement.

Aged 75 Sally is eligible for a maximum loan amount of 25% of the value of her home or $108,750. Assuming no election is made for a lump sum for an approved purpose such as home renovations or a car, this is available as a fortnightly amount drawn over 10 years, which means Sally would receive up to $415 per fortnight.

Sally can decide to pay interest or let it capitalise. And, should she decide to stop, pause or reduce the amount received she can, without penalties. When she decides to move out or sell her home, the loan needs to be repaid, including any accrued interest (account keeping fee to be paid monthly).

After a discussion with one of our loan specialists of Sally’s needs and objectives (including meeting any of her possible future needs) Sally decided to take half of her maximum amount available (i.e. $207 per fortnight) to give her flexibility in the future. Based on the Moneysmart reverse mortgage calculator projections, at the age of 90 she would own 86% of the home’s equity or $583,409. Please refer to the full projections summary, which can be accessed here.

Please note this is an example only and we refer you to the Important Notice found at the bottom of this page.

Mick and Samantha are 68 and retired.

They own a land lease home on the coast valued at $379,000. Their home is now 12 years old and needs some improvements. The deck has some damage from the sea air which they would like to replace, and the kitchen and bathroom need some upgrades which they have budgeted to cost $22,000. They would also like an income top up each month of $250 drawn over 10 years to put towards living expenses and to keep their home maintained.

Because they are 68 and given their circumstances they qualify for a loan of up to $68,220 (i.e. 18% of their home's value). The features of a Lifestyle CAPITAL land lease home loan allow them to choose to capitalise interest, pay 100% of the interest, or just part of it, and prepay all or part of the loan when they choose without penalty when it suits (account keeping fee is paid monthly).

Assuming Mick and Samantha take a lump sum of $22,000 and draw down $250 per month over 10 years (equivalent to $30,000) and they capitalise all interest and age in place until 90 they will own 79% of their home’s equity or $575,593. Please refer to the output from the Moneysmart reverse mortgage calculator for a full summary, which can be accessed here.

Please note this is an example only and we refer you to the Important Notice found at the bottom of this page.

A Lifestyle CAPITAL land lease home loan may also be available to purchase a new home, provided you and the youngest borrower are at least 65.

Get in touch

Please feel free to use our Reverse Mortgage Calculator as a guide to potential loan amounts or give us a call.

For future home equity projections on a Lifestyle CAPITAL land lease loan please refer to ASIC's Moneysmart Reverse Mortgage Calculator.

LLHL Reverse Mortgage Calculator

FAQ's

Lifestyle CAPITAL land lease home loan

Land Lease Home Loans is the only financier currently in the market that can offer you a Lifestyle CAPITAL land lease home loan. This allows you to borrow against your home equity in a land lease community.

A Lifestyle CAPITAL land lease home loan is our innovative approach to borrowing against your home equity in a land lease community for responsible long term retirement funding. It is a type of reverse mortgage.

A reverse mortgage allows you to borrow money using the equity in your home as security. Interest is charged like any other loan, but you don’t need to make repayments while you live in your home. The loan must be repaid in full when you sell or leave your home or, if you move into residential aged care.

To find out more about reverse mortgages, including a reverse mortgage calculator to help you work out how much equity you may have in the future, refer to our Reverse Mortgage Information Statement, and visit the Australian Securities and Investments Commission’s free consumer website at www.moneysmart.gov.au.

A Lifestyle CAPITAL land lease home loan is a reverse mortgage, so you benefit from key structural and legislative protections. This means you can't end up owing Land Lease Home Loans more than your home is worth (market value or equity).

  • Ownership - You remain the owner of your home (and benefit from any increase in property value).
  • Lifetime Occupancy - You can stay in your home for as long as you want to.
  • No Loan Repayments - There is no requirement for you to make periodic loan repayments (although you can do so at any time without penalty). Interest continues to accrue over the life of the loan which, along with the balance of the loan, is payable when you leave or sell your home.
  • 'No Negative Equity Guarantee' (NNEG) - You cannot end up owing us more than your home is worth.

A Lifestyle CAPITAL land lease home loan allows you to access the equity in your home through a loan facility that doesn’t require repayment until you vacate or sell the property.

The amount you can borrow is a function of your age and the value of your land lease home. The older you are, the greater the borrowing power. The minimum age to qualify is 65 and the maximum amount you can borrow is 15% of the value of your home, and increases by 1% for each year that you are older than 65 to a cap of 25% when you are 75 and above. You can also opt to have a dollar figure of your home equity protected which is deducted off the value of your home to calculate the LVR.

We encourage you to understand how it may affect your personal circumstances – by talking to friends, speaking to professionals and using available resources such as www.moneysmart.gov.au. Before you enter into a Lifestyle CAPITAL land lease home loan we will ask that you obtain independent advice from a financial adviser or legal professional, and that you check with the Services Australia Financial Information Service about how it will affect (if at all) any pension or government benefits you are receiving or entitled to receive in the future. Learn more here.

Generally our contracts require repayment on the earlier of:

  • the date on which the mortgaged property is sold or transferred; or
  • 365 days after a repayment event occurs to the last of a borrower.

A repayment event occurs if a person:

  • dies;
  • ceases to use the mortgaged property as the person’s principal place of residence; or
  • permanently vacates the property.

Equity

Yes, a Lifestyle CAPITAL land lease home loan can provide a regular income stream. Taking the money only as you need it will minimise the interest accrued over the life of your loan.

The National Consumer Credit Protection Act 2009 ensures protections are in place, these apply to a Lifestyle CAPITAL land lease home loan.

  • You remain the owner of your home and the title remains in your name. This gives you full exposure to any growth (or loss) in the value of your property, into the future.
  • You can stay in your home as long as you want to – you have guaranteed occupancy. You cannot be removed from your home by the lender, nor be forced to sell your home at any time against your will, as long as you have met your obligations under the loan, as specified in the terms and conditions of the loan contract. You do have a responsibility to remain living in your home, meet the conditions of your Residential Site Agreement with the land lease community operator, and to keep it well maintained and insured.
  • You cannot end up owing us more than the house is worth. The 'No Negative Equity Guarantee' (NNEG) clause, introduced in 2012, means you are protected by law and cannot owe more than your home is worth, irrespective of the value of the property.

Protected equity works alongside the 'No Negative Equity Guarantee' (NNEG). You can elect to “protect” a percentage (5 - 20%) of the value of your home. This is best explained with an example: if your home is valued at $500,000, you are aged 65 and want to maximise your equity release to 15% of the home’s value but also want to protect 20% of the home’s value on the repayment date (i.e. $100,000). The maximum amount we can lend is 15% of $400,000 (i.e. $500,000 less $100,000 protected equity amount) or $60,000. If you elected 0% of protected equity (noting NNEG always applies) the maximum amount we can lend is 15% of $500,000 or $75,000. Don’t worry if this appears confusing (it is) and we can explain this over the phone using your specific circumstances and objectives.

Purposes

A Lifestyle CAPITAL land lease home loan may transform your retirement by enabling you to:

  • Boost your regular income so you can do more with retirement
  • Renovate or modify your home
  • Cover medical costs, health insurance and other bills
  • Pay for your choice of in-home or residential aged care
  • Purchase a land lease home.

Yes, you can use a Lifestyle CAPITAL land lease home loan to make renovations or modifications to your home. You can access your loan as a lump sum, which you can then use to make the necessary renovations to make your home retirement ready.

A cap of no more than one third of the maximum available loan amount applies.

Yes, the purchase of a personal asset is an approved purpose. Includes car, caravan and other personal assets.

A cap of no more than one third of the maximum available loan amount applies.

Yes, a Lifestyle CAPITAL land lease home loan can provide a regular income stream. Taking the money only as you need it will minimise the interest accrued over the life of your loan.

Yes, we would need evidence of the debt (e.g. bank statement, loan documents) and evidence of cancellation of line of credit when paid (if applicable).

A cap of no more than one third of maximum available loan amount applies..

Yes, a Lifestyle CAPITAL land lease home loan can be used to pay for your in-home care requirements, giving you greater choice and flexibility in terms of the services you can access.

A cap of no more than one third of the maximum available loan amount applies.

Yes, if one person remains residing in your home and one person is moving into residential aged care. You can use your Lifestyle CAPITAL land lease home loan to either; contribute to the cost of a Refundable Accommodation Deposit (RAD) and broaden your care choices, or draw an income stream to contribute to the Daily Accommodation Payment (DAP).

Yes, a Lifestyle CAPITAL land lease home loan can be used to pay for your medical expenses. We would require evidence of the medical expenses.

A cap of no more than one third of the maximum available loan amount applies.

No, the purpose does not currently include drawing down to provide a gift or loan to family and friends.

Our focus is on providing responsible, long term retirement funding. We do not currently provide a lump sum to fund holidays.

Advice

We encourage you to get financial advice. This will help you determine how best to deploy your home equity to ensure improved long-term retirement funding. A financial adviser can also help structure your financial affairs to maximise entitlements to the Age Pension.

Yes, Land Lease Home Loans requires you to get appropriate legal advice to ensure you understand your rights and obligations, and to confirm that a Lifestyle CAPITAL land lease home loan is right for your circumstances.

As the advice needs to be independent we can only suggest you speak to a local solicitor or adviser. For further assistance, please read more here.

The Age Pension is an important source of income for many retired Australians. We always recommend you speak to Centrelink and get financial advice to ensure you understand any impact on your entitlements.

Provided that you are both a Borrower, you remain the owner of your home with lifetime occupancy (you can stay in your home for as long as you want to). There are no loan repayments (the loan becomes repayable when you leave your home), and we provide a No Negative Equity Guarantee (you cannot end up owing us more than your home is worth).

The Pension Loan Scheme is not available against a land lease home. However the primary feature of the two loans to provide a supplement to the age pension is similar. You can read more about the Pension Loan Scheme here.

Interest rates

Reverse mortgages are only available with variable rates, the main benefit of this is that you have flexible repayment options. A Lifestyle CAPITAL land lease home loan may be repaid, in part or full, at any time without penalty.

The Variable Interest Rate on a Lifestyle CAPITAL land lease home loan is listed under Interest Rates.

Reverse mortgage interest rates are generally higher than a standard mortgage because there is no obligation for borrowers to make repayments until the end of the loan.

With a reverse mortgage you have no regular repayments so interest is added to the loan balance that will compound over time. In other words, you pay interest on the amount you have borrowed and on the interest (and any fees) charged.

Your interest rate can rise or fall throughout the term of the loan.

The variable interest rate Land Lease Home Loans offer could be affected by a number of factors, including but not limited to, higher or lower funding costs for the Lender.

Acting reasonably, we can change the pricing of your loan (including your interest rate and credit fees and charges).

Regarding the notice period, we will give not less than 20 days notice of a change to any fees and charges payable and not later than the day on which any change to the interest rate takes effect.

For further details please refer to Terms & Conditions.

The Loan Establishment Fee is $750, and Account Keeping Fee (payable monthly in arrears on each repayment date) is $10 per month. Other fees/charges:

  • Special attendance fee (e.g., variation or substitution of security, discharge of mortgage) is $250
  • Fee for provision of paper copies of documents is $25
  • Drawdown fee is Nil
  • Early repayment fee is Nil.

Reverse mortgage

Your loan is generally repaid from the future sale of your home. This may occur if you move into residential aged care, or the loan will be paid from the proceeds of your estate.

There are a diverse range needs a reverse mortgage can help you meet, including:

  • Setting up a regular income facility
  • Renovating or modifying your home
  • Covering an unexpected medical expense
  • Buying a new car
  • Funding in-home care expenses
  • Funding the transition to residential aged care (if one loan party remains living at home)
  • New purchase of land lease home (this loan is used to fill the gap between the cost of the home and your own savings, the interest can be capitalised and paid off in full when the home is sold).

A number of banks provide lines of credit or home equity loans that allow homeowners to access the wealth built up in their property.

However, getting credit from the banks has become tougher for retirees since the 2018 Royal Commission into the banking sector. Any form of credit has become less available to retirees who may not have the income to demonstrate they can meet the required repayments. The regular repayments needed to service a home equity loan or line of credit are likely to reduce your cash flow and therefore your retirement income. Each month, you have to find the funds to satisfy the bank. Many retired Australians feel insecure knowing their home is subject to repossession in the event being unable to meet repayments.

With a reverse mortgage, you don’t need to make regular repayments, although you can choose to do so. And whatever choice you make, you have guaranteed lifetime occupancy – you can stay in your home for as long as you choose.

The key benefit of a reverse mortgage is to improve your long term retirement funding. This enables you to:

  • Increase your retirement income
  • Turbo charge your retirement lifestyle
  • Remain living in your own home
  • Look forward to a long life with confidence.

The purpose of taking out a reverse mortgage loan is to improve your long term retirement funding, it enables you to access the savings in your home without having to sell it.

Security

The loan is called a Chattel loan and instead of a mortgage over your property you provide property security which is logged on the Personal Property Security Register (known as PPSR). We also take a charge over the Residential Site Agreement you have with the community operator, and we have a separate agreement with the operator that restricts any transfer of the Residential Site Agreement whilst a loan is outstanding.

Yes, home insurance is required to be in place prior to contracts being exchanged and settlement.

Please do not hesitate to contact us on 1300 555 626 or info@LLHL.com.au.

Connect with us

© Copyright Land Lease Home Loans 2021

IMPORTANT NOTICE: This information has been prepared without taking account of the needs, objectives, or financial situation of any particular individual. Applicants should consider their own circumstances and, if necessary, seek professional advice. Applications are subject to loan approval criteria. Terms, conditions, fees and charges apply.

Land Lease Home Loans Pty Ltd ACN 642 684 053 is a Credit Representative 527929 of Mortgage Direct Pty Ltd ACN 075 721 434 Australian Credit Licence 391876.