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An unregistered wholesale managed investment fund will be incorporated to process and manage the HIR^® Program applications and associated investible growth securities via a cloud-based digital platform. A Fund Manager/Responsible Entity, Corporate Trustee and independent Custodian will be contracted to oversee the capital assets, legal, compliance & regulatory and staffing processes related to the RCI platform business operation including responsibility for the management, transfer and reconciliation of capital between the MIS, Investors and licensed participants.

1. An upfront, non-refundable processing fee of A$850 for each HIR^® Program will be charged to cover the certified home valuation, title search, registered mortgage, legal costs, HIR^® Program processing, accounts & administration etc.
   
   
2. Establishment Fee is a once only, non-cash amount equal to 3.5% of the capital release amount that is deducted from the released capital at the beginning to meet ASIC liquidity, compliance, regulatory and ongoing operating costs of the Fund.

The HIR^® Program considers that there may be a number of older homeowners who currently have relatively small debt amounts against their homes. Any substantiated debt amount up to $50,000 can be retired using part of the released interest-free capital and replaced with income using a portion of the balance of capital. This feature has been designed to deliver a positive impact for an Applicants domestic cash flow.

Your home will initially be valued by an independent certified valuation group contracted by the Fund Manager of the Managed Investment Fund (MIS) who is responsible for the management of the HIR^® Program application process and the associated residential growth securities. The certified home valuation is used to establish the capital release amount which is managed by the Fund Manager and Custodian pursuant to an investment mandate that will define a suite of risk averse asset classes and investment products that can potentially generate an acceptable investment return over time on behalf of the homeowner.

The equity value to growth for an Investor is fixed at the start and remains fixed for the entire term of the HIR^® Program. However, the notional equity controlled by a homeowner during a HIR^® Program may potentially increase over the term relative to the valuation of the home. In other words, the homeowner may potentially reclaim equity in a HIR^® Program but under normal market conditions can never lose equity.

Yes. The capital release amount is provided to the homeowner by the Investor as an open-ended interest-free loan to fund the HIR® Program. The value of the capital release amount at the end of a HIR® Program will be a function of the investment performance of the Fund Manager. A neutral or positive investment performance will ensure the capital release amount is either preserved or increased over the term of the HIR® Program. Therefore at redemption, the capital release amount managed by the Fund Manager on behalf of the homeowner will be returned to an Applicants MIS account and offset against the initial loan amount and Investor growth credit. If the investment return generated by the Fund Manager has been greater than the income distributed, the homeowner will pay back less than the original capital release amount held in the homeowner’s account plus any growth accrued over the term. The HIR Program is ideally designed to preserve the capital release amount while distributing regular income so upon redemption, the capital release amount is repaid to the Investor by the Custodian of the MIF and the Applicant is required to pay the Investor growth credit.

The HIR Program Income calculator can be used to initially work out the income level necessary to preserve your current pension. Your Trusted Partner is engaged to ensure this is the case. This will be subject to the Centrelink income test for eligible pension recipients. Your Trusted Partner will confirm the optimum capital release amount needed to deliver the appropriate tax-free income required based on the information and data you supply in the HIR^® Program application ensuring your aged pension is not impacted.

You will continue to receive your periodical income for as long as you are able to live independently in your own home with or without assisted services or until your capital is exhausted.

If the certified value of your home is $800,000 and you release an interest-free capital amount of say $200,000 to fund a HIR^® Program, the LVR would be 25% ($200k/$800k = 25%).

The HIR^® Program is a progressive way of releasing interest-free capital from a home on the fairest of terms to fund an income supplement and to generate an investment return on behalf of the homeowner Applicant.

However, the Federal Government and policy landscape that the HIR^® Program will operate in is quite complex, particularly in relation to assets and income received. To ensure the optimum settings for a HIR^® Program in respect to the amount of income received will not impact an Applicants current welfare entitlements, it is critical for the homeowner Applicant to receive professional guidance, support and advice from an ASIC registered Advisor (Financial Planner, Adviser or Accountant). This relationship ensures that someone with professional knowledge will always be there for you not only in regard to a HIR^® Program but also in the event when other issues arise that can both impact and concern you in the future. 

The periodical drawdown of income from the capital release amount will assist retirees, self-funded retirees and single men and women homeowners fund a myriad of discretionary and non-discretionary costs including but not restricted to aged care, in-home care, disability, health, utilities, savings plan, investments, lifestyle, etc. without negatively impacting their homeownership, domestic cash flow, pension, savings, superannuation, equity or home bequest value.

The investment income generated by the Fund Manager on a self-funded retiree applicant’s behalf from undistributed capital can potentially be offset against the internal costs of earning the investment income return. For example, the investor growth credits, establishment fee, cost of management etc. will enable most self-funded retiree homeowners to receive tax-free income, reclaim equity and preserve or even increase the capital release amount in their favour over the term of the HIR^® Program.

No. Unlike a reverse mortgage or other interest rate based equity release products, the HIR^® Program does not charge interest on the capital released. Instead, the homeowner Applicant assigns growth in a fixed amount of home equity based on the LVR to the Lender or Investor in consideration for providing the interest-free capital. The investor equity value to growth is fixed at the start and will not change irrespective of the upside magnitude of annual growth recorded over the term of the HIR^® Program. For a homeowner, it provides the fairest and most equitable way to access the wealth store in their home to fund an ongoing income supplement for purpose.

Naturally there are redemption events that when triggered, will require the HIR^® Program capital value to be repaid to the Lender/Investor either by the repayment of the HIR^® Program, sale of the home or by some other means.

HIR^® Program redemption events include:

• Death of homeowner (accept where there is a surviving partner)
• Home is sold
• HIR^® Program is bought back at market value
• Homeowner is permanently transferred to a supported living environment (other than an aged care facility that is funded by a HIR^® Program)

Yes subject feasibility. Feasibility issues relate to the payment method requested for the aged care accommodation. For example, if only a small deposit is required (RAD) and then aggregated into a monthly accommodation payment (DAP), the HIR^® Program could potentially be reconfigured to meet the periodical costs required for the aged care residency. However, if a very substantial deposit is required, a HIR^® Program would not be suitable. A monthly accommodation payment would enable the homeowner moving to an aged care residence and their family to use the HIR^® Program (adjusted or otherwise) to fund the aged care costs while holding on to the family home until they work out exactly what they wish to do with it?

When a redemption event occurs that involves the death of the homeowner, an extended settlement period of up to 12 months will be afforded to families to provide them with ample time to make important decisions relating to their deceased parent or the family home. However, if a redemption event relates to the sale of the home or the buyback of the HIR Program, a normal settlement period will apply.

 No. There is no penalty for the early repayment of the HIR^® Program.

The HIR^® Program is currently an income program for older homeowners who meet conditions that aims to quarantine the interest-free capital released from a home into a licensed and regulated environment from start to finish. However, as part of the HIR^® Program, an interest-free lump sum capped at A$50,000 is optionally offered in addition to the regular income stream and can be accessed via the HIR^® Program application process by an Applicant. In the future, the HIR^® Program may be offered as a total lump sum to older homeowners but this will be subject to decisions made by the RCI Platform Australia Limited Board.

Yes. A homeowner can have a HIR^® Program pre-approved by submitting an application in conjunction with a Trusted Partner to the Fund Manager of the Managed Investment Fund responsible for processing HIR^® Program applications. The benefit of doing this is to eliminate the emotional and financial stress for families that inevitably occur when an unforeseen event occurs outside of the control of the homeowner or family. It provides peace of mind as well as a form of insurance protection for the cost of a HIR^® Program application fee of A$850.

Many Australians older than 50 years have not had the full benefit of compulsory superannuation in their working lives although they are part of a demographic that boast a high level of homeownership. A subset of this demographic are women who have little superannuation because they have spent most of their adult lives at home bringing up their children and not in the workforce. Marriage breakdown has impacted this situation further despite the fact that many divorced women become single homeowners as a result of divorce settlements. The family home has never been a good income earner. There are financial products such as a reverse mortgage and home reversion that provide ways of accessing capital from a home. However, both have the potential to erode homeowner equity by the compounding of interest over time or upfront by the discounting of a home’s true value.

A HIR^® Program provides a fair and equitable way to release interest-free capital and fixes investor equity to growth at the beginning based on the LVR. It aims to preserve the capital release value over the term in favour of the homeowner whilst underwriting the ownership and bequest value of the home. A HIR^® Program carries little if any reputational risk for the Lender.

A Reverse Mortgage charges a higher interest rate on the principal loan amount and if interest payments are not made, the interest compounds against the principal loan amount causing the debt amount to increase over time.

When the loan is eventually repaid, the compounding interest can result in a significant depletion of homeowner equity due to the increased debt amount. This is reflected in the compulsory and legal inclusion of a ‘No Negative Equity Guarantee’ for all interest-based reverse mortgage products. This essentially means that you can never owe the Lender any more than the value of your home. But without question, the real risk of a reverse mortgage clearly resides in a changing economic environment in which interest rates start to rise.

A Home Reversion product involves the ‘open’ sale of a piece of equity in your home. Lender risk is brought forward by discounting the real value of your home to establish how much capital you can access from your home. Although a home reversion product negatively impacts the homeowner’s equity position from the start, it may prove useful for those homeowners who carry a high level of debt against their homes and need a lump sum to retire the debt. 

A HIR^® Program releases interest-free capital from a home based on the LVR. The LVR of a home is used to establish the growth amount assigned to the Lender in a HIR^® Program in consideration for providing the interest free capital. The equity value allocated to the Lender in a HIR^® Program remains fixed throughout the term so there is no risk to homeownership. The interest-free capital will be managed by a Fund Manager in conjunction with an independent Custodian who will drawdown periodical income from the released capital to the homeowner and invest the balance of capital into mandated investment assets capable of generating an investment return on behalf of the homeowner.

The primary objective of the Fund Manager is to preserve as much of the released capital as possible by generating an investment return that can be offset against the income distribution to the homeowner over the HIR^® Program term.