Home Equity Conversion Plans

The Age

Sunday May 30, 1993

IS the Kennett Government completing arrangements for the Labor-mooted ``home equity scheme", whereby cash-strapped older home owners can obtain loans on the equity of their home and not repay it, because the lender obtains the title to the house on the death of the last living partner? The difference between the accumulated debt and the value of the house would then go to the beneficiaries. Are overseas examples of such schemes being studied? Which organisations in Melbourne could help seniors in this asset- rich, cash-poor predicament? Name and address Supplied ADVANCE Bank has been running a home equity conversion scheme for many years. This is open to persons over age 68 wishing to convert some of the equity in their home into a lump sum (20 per cent of value).

The Victorian Ministry of Finance is still working on its version of a home equity conversion scheme and hopes to have it running later in the year. At this stage it will be available through one retailer only.

The Ministry of Finance plan involves payments on a drip-feed basis rather than a lump-sum basis and will be available to those aged 70 and over.

The providers of these plans have looked at overseas schemes in designing the plans.

Mark Lowe, Advisor Investment Services