In banking, winning young customers, becoming their “main financial institution” and selling them products as they go through life are often lauded as the keys to riches.
It builds on Mr Phillips’ prior broking business, Smooth Retirement, where he discovered large pools of older Australians to whom it could lend rather than just act as a middleman.He says the business is nearing terms with a “large pension fund” for debt funding for its loan book, and mostly expects to play in the refinancing market, including via brokers, as well as taking on new borrowers.
Big banks have ceased offering the products and the entire mortgage market tightened lending standards after the Hayne royal commission in 2018-19, making it harder for some older Australians to get or refinance 30-year mortgages.Mr Phillips said many Australians carrying a home loan into retirement typically used their superannuation to pay it down, leaving them with less income.
It would work with customers on when they wanted to retire and their financial situation, using technology to screen scrape their financial data to determine a “reverse entry point”.At this point the loan would switch into its reverse mortgage product and repayments would stop, with the interest capitalised into the loan and repayable upon sale of the property.