Homesafe

Homesafe: debt-free equity release for older homeowners

Homesafe Solutions Pty Ltd is an Australian company that offers Homesafe Wealth Release®, a financial product aimed at older homeowners who want to access liquidity without selling their home or taking out a loan. The company has been operating since 2005 and states it has assisted over 9,000 homeowners. Its proposition is based on purchasing a capped share of the future sale price of the home in exchange for a lump sum cash payment.

How the product works

Homesafe Wealth Release® is not a loan. The homeowner sells Homesafe a maximum percentage of the future gains from the sale of their home. That percentage is fixed in the contract before signing and does not generate interest, compound charges, or monthly payments. The homeowner retains the right to remain in the home for life, guaranteed in writing. The amount Homesafe can receive is capped and known in advance.

If the home is sold earlier than expected, Homesafe applies an Early Sale Rebate: the sooner the sale, the larger the rebate, so the company does not automatically receive the maximum percentage. In addition, the product includes built-in negative equity protection: if the home sells for less than the lump sum advanced, Homesafe bears the difference and neither the homeowner nor their estate is liable for it.

Comparison with a reverse mortgage

The company presents a comparison between its product and a reverse mortgage. According to that comparison, a reverse mortgage is a loan secured against the home in which interest compounds over time, creating a growing debt that is repaid when the home is sold. In contrast, Homesafe Wealth Release® does not create debt, has no interest rate or monthly payments, and the share given up is capped and agreed. A reverse mortgage reduces the remaining equity as interest accumulates; the Homesafe product allows a portion of the home's value to be protected for inheritance. The company notes that it does not offer reverse mortgages and recommends seeking independent financial advice when comparing options.

Eligibility requirements

To take out Homesafe Wealth Release®, a series of conditions must be met:

• Be at least 60 years of age in Victoria, or at least 55 years of age in New South Wales (with at least one homeowner aged 60 or over in NSW) at the date of the contract.
• The property must be in an eligible area: the company operates in selected postcodes across Australia.
• The home must meet a minimum land-to-dwelling value threshold, confirmed by an independent valuer.
• It must be the principal place of residence at the time of settlement.
• Own the home outright or with a small remaining mortgage; any existing mortgage must be repaid from the amount Homesafe advances, unless other funds are available.

The company states that it currently services eligible postcodes in New South Wales and Victoria.

Impact on family and inheritance

Homesafe explicitly addresses concerns about the impact on inheritance. Because it involves the purchase of a share of the future sale price, not a share of the current value of the home, the company assumes the homeowner will remain in the home for many years and therefore the amount it pays today is a discounted figure. If the homeowner sells earlier than expected, Homesafe may receive less than the maximum percentage and returns the difference through the Early Sale Rebate. The remaining portion of the sale price belongs to the homeowner or their estate. The company encourages clients to invite family members to the appointment with the specialist and to review the estimates together, at no cost and with no obligation.

Real cases and uses of capital

The website includes three cases of real clients who gave their written consent. Margaret, 72, a Melbourne resident with a home valued at AUD 1,100,000, received a lump sum of AUD 170,000; Homesafe's maximum share of the future sale was set at 31%, with an Early Sale Rebate period of 11 years. She used the funds for home renovations and trips with her grandchildren. Brian and Helen, aged 68 and 65, in Sydney, with a home valued at AUD 1,400,000, received AUD 190,000; the maximum share was 33% and the rebate period was 14 years. They used the money to supplement their pension and pay off a small credit card debt. Robert, 75, in Melbourne, with a home valued at AUD 990,000, received AUD 150,000; the maximum share was 26% and the rebate period was 9 years. He funded care services for his son. The company warns that past results do not predict future results and that the amount received, the share given up, and the rebate depend on the property value, age, contract terms, and the future outcome of the sale.

Regulatory framework and protections

Homesafe's business is regulated by the Australian Securities and Investments Commission (ASIC) under corporations law, and the contract is governed by property law. The company highlights that the contract includes protections such as stamp duty exemptions provided by the government and contractual protections over the property. The company also mentions that the funds obtained may affect entitlement to government benefits.

Contact and consultation process

Homesafe offers an obligation-free conversation with a specialist, which can take place at the interested party's home. The contact phone number is 1300 307 059. The company stresses that it does not sell or share personal data with third parties.