BankWest Seniors Equity Release

Established in 1895 as a lender to support Western Australia’s farming industries, the Bank of Western Australia, commonly known as BankWest, became a full trading bank in 1945. An expansion into the other states has created an extensive banking network currently serving around 860,000 customers.

BankWest entered the reverse mortgage market with the Seniors Equity Release loan. This is a single product, and it is partially due to this lack of flexibility that BankWest was given a two-star rating in the Cannex inaugural October 2007 Reverse Mortgage Star Ratings report. The Seniors Equity Release loan was awarded the prestigious Gold Medal in the 2007 Money Magazine Best of the Best awards for the Best Reverse Mortgage by a bank.

BankWest is a member of Senior Australian Equity Release Association of Lenders (SEQUAL) and as such has voluntarily adopted a strict code of conduct.

The Seniors Equity Release has a variable interest rate. Funds can be accessed as a lump sum or can be progressively drawn, or accessed via a combination thereof. However, there is a minimum redraw amount and fees apply for both one-off and progressive redraws, although there is no ongoing or monthly maintenance fee. The maximum loan-to-value ratio is 25%.

One drawback to the Seniors Equity Release is the lack of any equity protection, which means that no portion of the equity can be reserved by the borrower as an inheritance or to fund an accommodation bond. Although the no negative equity guarantee mandated by SEQUAL means the borrower can never owe more than the value of the property, the lack of equity protection means the loan plus the fees and interest accrued through the years can consume the entire value of the house.

The upfront loan origination fee includes the cost of the original property valuation plus legal fees. The valuation must be repeated ten years after disbursal and every five years thereafter. The cost of the valuation varies and is rolled up into the loan to accrue interest.

BankWest does offer a portable loan option.

Voluntary repayments are not applied to the interest or principal of the loan, but are considered surplus funds that can be accessed as additional equity.