Ageing population demands new banking focus
Bendigo Bank is responding to the growing social issue of Australia’s ageing population with home equity release products designed to boost retirees’ cash flow while providing them with certainty about the future of their home.
The bank has released a new product – Bendigo Retirement Lifestyle Income – aimed at addressing the issues of self-funded retirees who are asset rich but cash poor.
This follows the recent release, through a joint venture company, of the unique Homesafe Equity Release, which is a deferred sale of an agreed proportion of the home.
Bendigo Bank Chief Operation Officer Mike Hirst said the Bank has made a commitment to provide specific facilities to retirees.
“The key to serving the needs of retired customers is trust,” Mr Hirst said. “The customer must be convinced that the bank has their best interests at heart and we believe Bendigo Bank is a trusted brand which will stand us in good stead in terms of helping customers achieve their aim of a secure and comfortable retirement.
“We have a strong customer base in this demographic and it was becoming obvious that there was a gap in the marketplace in terms of retirement incomes and products specifically catering for these customers.
“Bendigo Retirement Lifestyle Income is a complementary product that provides medium term cash flow for those retirees who may wish to access equity in their home rather than liquidate other assets they may hold. It is really a facility that provides customers with the flexibility to optimize management of their assets in retirement,” Mr Hirst said.
Research undertaken by the bank indicates that the key elements self-funded retirees are seeking include adequate income to support a good lifestyle and, at the same time, the security of knowing the level of assets they will leave in their Estate.
Bendigo Retirement Lifestyle Income is a fixed interest rate, has a fixed five-year term, and it requires no payments until the end of the term. It is likened to a bridging loan which allows customers to defer major decisions like selling the family home.
The loan is paid to the customer as a series of monthly payments, with an optional upfront amount.
Lifestyle Income does give retirees, from day one, certainty as to the amount of the outstanding debt after five years, and does so in a very cost-effective manner.
“This new product allows retirees the time that may be required to take full advantage of their assets that sit outside the family home,” Mr Hirst said.
“It gives them full control over their assets and also the choice to decide when they wish to sell assets or restructure their finances.
“These customers don’t necessarily have wealth creation as their prime objective; we are now seeing a shift towards wealth preservation and the way this product is structured – with a series of payments over time – is a significant step towards achieving that.”