ABN AMRO Home Equity Access

As the 20th largest bank in the world, ABN AMRO maintains a global presence in 53 countries and offers a full range of advisory, financing, and operational services for corporations and public sector clients through a full-time staff numbering over 105,000.

This power and security has also been brought to bear on the retail banking market, including stockbroking and wealth management, and in particular their reverse mortgage product, Home Equity Access. This was first launched in November 2005 although the bank’s experience working with equity-related products is much lengthier.

ABN AMRO is a founding member of Senior Australian Equity Release Association of Lenders (SEQUAL), a not-for-profit member organisation designed to protect borrowers and as such is governed by a strict, voluntary code of conduct.

The ABN AMRO Home Equity Access loans have won multiple awards since their inception and in fact comprised the most awarded reverse mortgage program in Australia in 2007. It was one of only two lenders awarded a five-star rating by Cannex in their inaugural October 2007 Reverse Mortgage Star Ratings report. The Home Equity Access loans also won Money Magazine’s 2006 prestigious Gold Medal for best reverse mortgage (non-bank) less than one year after the product’s launch.

One reason cited for the Cannex five-star rating is the program’s flexibility. There are six varieties of the Home Equity Access reverse mortgage, with interest rates that are variable, fixed for a set term, or fixed for the life of the loan, and that are competitive within the industry.

All varieties of the product offer multiple choices for borrowers to access their equity: either as a lump sum, an ongoing income stream, a Flexible Drawdown Facility which is an available line of credit (also called the “rainy day” facility), or as any combination of the three. The Flexible Drawdown Facility carries no ongoing fees or charges and no interest is applied until it is used.

Up to 25% of the homeowner’s equity can be protected against repayment of the loan. The maximum loan-to-value ratio is 50% and varies with the age of the youngest borrower.

ABN AMRO does offer a portable loan option as well as a no negative equity guarantee as mandated by SEQUAL. The upfront loan origination fee includes the cost of the initial property valuation. An additional valuation is required every three years but according to the Cannex report, the cost is not passed on to the borrower.

The Home Equity Access reverse mortgage charges no maintenance or ongoing monthly fees, nor redraw fees. There are no early repayment penalties.

The bank’s plans for the future include an accommodation bond package and increased availability of the product across Australia.