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If you're old enough to remember when phones had cords and the only thing that went viral was a cold, then you're in the right place. Welcome to the Big Six-O with Kaylee Harris and Guy Rawlison. Because who better to discuss life's second act than two people who still think mature is a type of cheese?

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Hello everyone and welcome to the Big 6-oh podcast. It's great to have you joining us. I'm Kayley Harris  and joining me as a primary school deputy school captain, Guy Rowlison welcome.  Welcome back.  Now when it comes to content for the podcast, we have covered so many topics in the first 60 episodes, haven't we?  Everything from school excursions to navigating aging, misheard lyrics, 70s pop stars.

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Look, and one of the things that we've had from our greater Facebook family, the Big 6O family,  is to do a podcast  on managing finances, uh navigating retirement,  and that fits in very nicely with our guest today.  So I'd like to welcome Andre Carney, who is co-founder and CEO of a business called Inviva. Now, Andre spent  probably almost a quarter of a century in the banking and finance industry in Australia.

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and in Viva specialise in a product called Equity Release Loan. So welcome, Andre. Thank you very much. Thank you for having me. That's all right. Now we've to get this out of the way to start with. So are you you past 60 yet? I'm not past 60. I'm very close to 60.  Maybe three years or so and I'll be there at the big six. So beautiful. Perfect. Well,  let's get straight into it. Now I want to talk about the name of the property. As Guy introduced it.

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as an equity release loan. So let's talk about the name firstly, because I want to clear this up. An equity release loan, were they originally known as reverse mortgages? that? Yeah, look, an equity release loan is quite a broad name.  know, anyone can release equity from their homes, whether they are a young age  or  in a later  stage. A reverse mortgage is a particular style or product.

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and it is effectively an equity release loan, but it's governed by certain regulations and there's certain things around that. Yeah, we can get in, we will get into that, but they didn't really come on whatever the title you want to call it, they really came onto the market here I think in the 90s. Am I right in saying that? Yeah, so even pre-GFC there was kind of 22, 23 odd lenders, all the big banks were doing it.

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and  overseas banks, etc.  And then GFC came up.  And it was kind of the Wild West days  in  that period, in that it was pretty much an unregulated loan.  really? I like to think of it as um reverse mortgage 1.0. And a whole lot of regulation came in, um and we've got reverse mortgage 2.0.

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And we can talk about that a little bit later. Which is the next generation. So when you say what impact did it have on the GFC? Effectively what happened is there was a clean out because a lot of the funders in the first instance their funding dried up as the world markets kind of tightened up on liquidity. The Banking Royal Commission came in which had an impact and

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Given that there was no regulation on these loans,  there were a whole lot of things that were looked at and I think that the banks had to provide a whole lot um more capital against all these loans.  The industry went through  quite a reset  and then the regulations came in which kind of  cleaned up the balance, if you like. Because from memory when all this started to appear on the  Australian financial landscape,

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They just copped a very bad rap, didn't they? the  financial planners weren't really advising this way. What were the reasons behind that? Look, the reasons were quite simple in that you didn't have, like today, the  tight controls around what you could lend and the steps that you had to go through in order to make sure that it was the right product fit and the right thing for the customer.

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So you could go and lend large amounts of money to potentially  older people um and it wasn't appropriate for them.  And there was no controls around that. So naturally people did in certain circumstances get into problems um because  the market was wide open.

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But that's changed a lot now, hasn't it? It's very highly regulated now. So I want to ask you, let's get into how they work. Are there regular repayments that you have to make or is the money only repaid once you pass away or the house is sold? What are our options with that? And how much can we lend? So, well, let's start there. So first of all, the most important new feature is around how much you can actually borrow.

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and simply put your age less 40 gives you the amount that, maximum amount you can borrow. In percentages? Yes, so if you take 60 as your age, less 40, you can borrow a maximum of 20 % on the value of your home. Okay, that's a really easy way to remember. And if you're 70, it's 30, and if you're 80, it's 40, and so it goes. So it's again, very tightly regulated and has bought

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really an even playing field for both lenders and customers, where in the old days it was probably  way in favor of lenders.  And that's good. You want customers looked after. So  that's the starting point. And so it's got to work and suit the customer from that perspective.  And if they have a larger debt on their property already,  well, it's not going to be the right thing for them. So if they're carrying a mortgage with their bank in excess of  what they're able to borrow,

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It just won't work. So there's kind of the first thing. um It's a very simple and easy process, actually, insofar as, you  when you do apply for a normal mortgage or what's called a forward mortgage,  you have to show all of your financials and you have to do serviceability because of the monthly payments involved. And to your earlier question, there are no monthly payments. So you're borrowing a smaller amount, yes.

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but you don't have to make any monthly payments. You're free to do that if you'd like, but if you don't want to, um then you don't make those and really just the interest then accumulates on the loan. um People do then make, occasionally they make capital repayments or interest repayments or they do a whole host of different things.  So it's easy and simple to  kind of set up.  It's got the freedom of being flexible around the payments.

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And it's  term, there's no specific term on it. So if you think around that, people don't need to worry that this is coming up in three years or five years or 20 years or whatever else. So it's kind of  a loan for life. And  you've got the right to occupy your home forever and a day, um which  is really nice. Yeah, I actually think uh it's a really...

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good product and I'm blown away that people didn't  think of it before. It just seems like such a great idea. Yeah. Yeah. Andrea, I'd ask you though,  do the repayments, because I'm a newbie with all this as well, as I'm sure a lot of people listening are as well, do the repayment amounts  vary depending on the value of the home or are they fixed? No, not at all.  irrespective of the value  of the home,  it's on the amount that you borrow naturally,  like another mortgage. And so...

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whatever your interest payment is  in each month,  you can pay it if you like. um Most people tend not to because  they kind of want the freedom  to do what they want to do and live their best life, I guess, and  go and do the things that they want to do. um so,  it's straight off the amount borrowed. um Yeah.  Do I have to be retired to be able to?  No.

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apply for one. You can still be working. Is there an age limit? 55 and above is the age. And are all homes eligible? All homes and units, all of those things are available. Anywhere in the country? Anywhere in the country. While saying that, we do look at the property as the

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obviously as the security for the loan. And so we look at each property very carefully. We will do a valuation, be that either a digital valuation in certain circumstances or your normal valuation where a value comes around and values the property. But yeah, there's certain properties of course where you'll look at potentially the state of them and you'll go, well, that could be a of a problem, but that's very rare.

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So how does, so if for example you've got a 60 year old who's still working, they owe a small amount on their mortgage, maybe a couple of hundred thousand dollars, something like that, but they've still got a mortgage with another lender, how does your loan impact the other lender? Do they get antsy about it? Yeah, so great question. We have to have a first mortgage. so we pay out any other finance institution or bank

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that's holding the first mortgage. we would, in your example, where let's say there's 200,000 owing, let's say they're eligible for another 300,000, we would pay 200 out and there's 300. And you'd get the other 300. Yeah, correct. Now, you can get that, again, in the flexible options, you can get it as a lump sum up front, you can get it in a line of credit to draw down over time, or you can get it in a monthly income where

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which is  again, quite a cool way  for a retiree to think about things where they know they've got a set amount coming in  each month or each quarter. yeah, again, very flexible. We would have to take that bank out. Most people want that because they're kind of at the age and stage of  saying,  I don't really want to make the payments. done with  it.  I think I'm done with the bank now um and I'm ready to  make some different choices in my life.

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Do you think people are actually prepared  for retirement  or do they think it'll just work out?  And because people are always talking about being asset rich and cash poor,  is this a product that people should be considering?  In the right circumstances, absolutely. I think,  and  if you look  inside our business,  yes, maybe because...

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because people are taking it out and the demand for it is significant. I think the major challenge is people are not aware of it and there needs to be a large education piece around it. It's not for everybody, but if it's for you and makes sense, then absolutely. Now, this challenge of asset-rich and cash-poor,

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um doesn't discriminate. It's across  the whole of Australia, it's across all suburbs, it doesn't matter whether  the property is worth  in the hundreds of thousands  or in the tens and tens of millions,  you see the same  issue.  And it's a large issue in Australia. You know, there's five and a half to six million  people over the age of 55. They're sitting on  three trillion odd of home equity. um But...

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They just don't have the cashflow in a lot of instances. And they're not ready to move. They're not ready to sell. They're not ready to take the next stage. think it's important to stress to anyone listening to this that you will, you should seek your own independent financial advice, obviously for any product like this, but are the interest charges variable or fixed and how do they compare to those on a regular home loan? So if I've got a regular loan, I'm paying 5 % interest.

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What am I paying on this one? So  it  first was variable.  It's only variable. Again,  there's no term on it. So it's kind of it's variable and it goes up and down with the market and it goes up and down to the market. Depending on what happens with the cash rates. um That's how we adjust. um We it's higher than the normal mortgage for the simple reason. Well, there's no term. There's no monthly payments coming in. So.

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It's a very different product that you've got to allow for from a finance perspective. So if you're on five, well, you're doing really well, the way. I would hold on to that. And then you would look at reverse mortgage rates in the eights and that's where the market's at. to give you a sense. So how much are the fees to set up a loan and are you eligible for loan if you're still working?

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Yes, if you're still working, that doesn't make a difference, or part-time, and again, we're not assessing your income, so that's really good. The fee is, there's a one-off fee of $995, and that's it. Nothing more. Wow. It's kind of designed to be simple, easy, yeah, very competitive from that perspective.

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So will accessing the money affect your pension if you are over 65 or 67 or 70, whatever, and you're getting the pension, then you decide to take your product? Does it affect the pension? So you talked about independent financial advice a little earlier, which I'm very pleased you Right, OK, good. And we make sure that we steer customers to be getting advice, including independent legal advice, for a host of different reasons. And you just brought up.

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um And they need to make sure that  if they are on the pension that this doesn't... That if they're drawing down every month then it's not going to throw them into another bracket. Exactly, exactly.  And so they need to make those  inquiries and get that advice. um Yeah, which we want for them because the product's got to work and got to be right. yeah.  One of the things that plays on the mind of probably a lot of us

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is leaving something to our kids.  So would this be a product that I guess you would recommend, but once again, financial advice is important,  that you would advise, say, yep, I want to leave something to the kids, but this product  probably would work  and dovetail with what your wishes are. Yeah, so very much so.  You know, we go through at the outset, you know, this question around how much equity would you like to  leave later on, obviously not knowing exactly when.

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when  that time may be,  but  as none of us do. But we give projections out which say, assuming you made no payments, assuming you drew down your whole loan today, where people generally don't draw down the whole loan,  this is what it would look like in five years, 10 years, 15 years, and so on.  So it gives customers a real  look into the future  as to what they would be owing down the track and what their likely equity would be. um

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that assumes, by the way, it's regulation, you've got to do that. Which again is a good thing, right? It's very healthy. And then it assumes some sort of growth on the property, know, kind of 3 % or whatever it is. And we can stress test that for customers. Say no growth, et cetera. So if I was eligible for, say, let's say $200,000, and I decide to take 100,000.

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then can I do that and then can I come back in 12 months time and say give me the other 100? Absolutely. Okay. Yes. Yeah. Or can I, if I start drawing down as regular payments and then go after 12 months, give me the rest of it now? Yeah. I can do that too? You can. Oh wow. You can. Okay.  And is it true that you will never owe more than your home is worth? Yes.  So there's something now called again, another regulation, which is, which is healthier and no negative equity guarantee.

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Okay, which means you're not going to die and owe you guys or your family will owe you money because it's gone over there. Exactly, exactly right. And so  that was there to address a specific issue and back to reverse mortgages 1.0, where you could go and lend any amount  within  some form of reason, but  large amounts were lent as a percentage of the value of the property. Therefore the loan accumulated and went past.  And then if the customer left the property, they had that.

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debt or if they passed away the estate didn't, it's just not a sensible solution and position to be in. So yeah, no negative equity guarantee specifically sort that one out, but I think the limit on how much you can borrow, you'd be hard pressed to get there. I'm not saying you cannot get there. that guarantee a government thing or is it just something you guys have yourself within your business or is it...

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government say you have to have it. It's in the regs, so government,  that's the first thing.  It would be illegal to try  and... That's our risk.  That's our risk at the end of the day  if for some reason  there's a negative  equity position down the  track.  Is the access or the cash that I access, uh is that subject to tax?  No. No. No. That's always a positive. Yeah.

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Yeah, it's, um look, again, you've got to get advice, right, because you're getting a payment in and,  you know, I don't know the situation where it would be taxable, but  yeah, would say no.  And now the other big question is compound interest. How does it work? What is it?  Yeah, I've always been confused by  compound So compound interest really is just interest on interest, right, because you're not paying

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of their interest. If you thought about it on a monthly basis, your interest was, if your loan was $100,000 and your interest was $500, your balance is $100,000 and $500, now your interest is now calculated on that increase. Yeah, $100,000 plus $500, then it just goes up from And it just goes up from there. Can that get out of control? Well, it will grow.

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If you're not making any payments, yes, it's going to grow. But again, given the amount that's borrowed is small, there's enough headroom. And it's kind of calculated especially on that. But yeah. Could you pay interest only back to you so that it doesn't compound? You can pay any amount you like. let's say on that 500 example, you could pay 250, you could pay 300, you could pay 600.

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Anything and some customers do that um You know some some customers inherit some money and they drop drop it in there. Yep uh Yeah, can can you draw down say a nominated amount  rather than taking out  a lump sum as well? Yeah, so that would be under the regular income and so it would just be set up you would say  I'd like a thousand dollars a month um Sent into my nominated account  and every month on the same day um

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thousand dollars would you know kind of arrive in your account. uh Is there a  set amount that I have to borrow like for example if I could I come to you every year and say okay now Andre it's time for my yearly trip yeah give me 20 grand I'm going overseas and then next year I come and do the same thing is that is do we have that flexibility? You can  it's  it would first of all the loan would have to be within the you know that that age-less body  so that's the first thing.

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it wouldn't be an efficient way to do it. So what we would rather do for you is you would say to us, look, I normally spend around 20,000 a year on travel. So let me have, you know, a line of credit for 100. You only pay on what you draw down so that there's no downside to that Yeah, that's what I'm thinking. If I only drew down 20,000. You only pay on the 20. Yeah, okay. And then you'll come next year and you'll say,

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another 20 and that's all you need to do then. It's a simple process for you. Okay, so just another question. I did it that way, say I was able to access $200,000 but I only drew down $50,000 and then I carked it. What happens then? You owe the $50,000. You owe the $50,000 and over.

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So that the estate doesn't have to worry about the rest of the 150. Only what's drawn down. Only what's drawn down. Absolutely. If there was one piece of advice, a take out, say people in their 50s, that you could give them today, what would that be? Live your best life.

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You know what,  I think it's education if  I had to.  It's awareness and education about what your options are out there and  trying to then  make sense of what your plans are  and what your requirements are and trying to get the most sensible solution. Is this for everybody?  Well,  no.  Is it for an agent stage? Probably. um People use it for a period. They  don't really feel like moving.

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They like the area, they like the house, they like having the grandkids come over, or the kids come over, or the kids are still there, or  they're swinging back. They're not ready to downsize yet.  And people do think that downsizing is the only option.  And that's got its own  set of challenges.  Downsizing means effectively  you're paying all your selling costs.  You're then paying stamp duty.

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and all these transfer costs which really are just lost. You then having to decide, how much do I now buy for on the new house given that I'm going to live for, well, you're not quite sure how long and then how do I invest that cash? And it's taxable all the income that I get on that and now my- Opens up a can of worms. My home is now a lower cost. Yeah.

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and therefore it's growing at  not as much  of a dollar rate as the more expensive home.  And so you've got to work out, well, if I just took down, took a facility off my bigger home, because I'm at the age of stage that I actually want to stay there,  that's a very real, sensible financial option, which  could be ahead, well ahead of downsizing, which seems counterintuitive,  but  it's real.

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So I would say education, if I had to pick one thing. um Financial education. very much so.  I'm  playing devil's advocate here.  I'm imagining that just say I take out the loan, I've taken out my $200,000 and then in five years time uh my health fails and I need to go into care and the house needs to be sold.

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The 200,000 then comes out of the sale of the property, right? Absolutely. Yeah. With the interest on top?  Well, whatever's accumulated. Exactly. So think of um whatever the balance is at the time that you sell.  Which is like, I guess like a normal mortgage rate. Exactly the same. I can imagine this would be a really good product for someone. And  I hate to say it, but  if you all of sudden needed urgent medical care and you've got this house sitting there worth money and you've got

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no money to pay for your medical care.  Would that be a good?  Well,  I can tell you that that's reality. So what we are seeing is if you think about used cases,  are seeing  absolutely medical care. um Or providing an amount of money for medical care in the future,  because, well, you're not paying anything for it, so you just allow for some medical care. We are seeing helping

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the children get into property, um know, bank of mom and dad. Can you still beam bank of mom and dad if you guys have got the mortgage? So what happens is,  and that's another used case,  I'll let you know about that because it's a really interesting one. We've seen travel,  motor homes and cars renovating the home and making it,  you know, fit for purpose for the next stage or just cleaning it up and sometimes getting it ready for sale.

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So all of those things are,  and aged care by the way, so they're keeping the property and then they need a sum of money to be  able to get into aged care. So  there's a lot of very interesting used cases, but on BOMAD, you know, the Bank of Mum and Dad, instead of guaranteeing um your children's loans, which is then an open guarantee and they generally would like to see all of your financials and serviceability. I'm not sure.

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you know, what else the bank would want from you. But with us, you can take a specific amount of money. So you can say, look, I've got three children and you can say, I'd to give each one of them 50,000, 20,000, whatever the number is. And you can draw down just that specific amount. And there's...

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there's your gift to that. Oh, and won't I look good? Plus the money you owe me, all right? All right. Yeah, there we go. Andre, if people want to find out more about Inviva, the product, how do they get in touch? Yeah, look, there's the website naturally, and there's a lot in there. And we just touched on BOMAD and there's kids calculators. I mean, there's lots of information and we put a lot of energy into.

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into the website in the first instance. And then yeah, sure, people are calling us all day long. What's the number? Yeah, sure. So it's 130022223. Easy. Easy to remember. Andre Carney, CEO of Enviva. Thank you so much for your insights, your time and spending just a little bit of today with myself and Kayleigh on the Big 6O. Thank you very much for having me. It was great to be here. Thank you.

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The views and opinions expressed on the Big Six O are personal and reflect those of the hosts and guests.  They do not represent the views or positions of any affiliated organisations  or companies.  This podcast is intended for informational and entertainment purposes only and should not be construed as professional advice. Please consult with a qualified professional for guidance on any personal matters.  Ah, and before we go...

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Let's give credit where credit is due.  Kaylee Harris and I came up with all the genius content for this week's episode.  Our producer,  Nick Abood,  well he keeps the lights on and makes sure we don't accidentally upload a cat video instead of a podcast.  So thanks for keeping us on track, Nick.  Nick?  Nick?