Bluestone Equity Release

Bluestone Equity Release was Australia’s first specialist reverse mortgage company, beginning operations in April 2004. One of only two lenders awarded a five-star rating by Cannex in their inaugural October 2007 Reverse Mortgage Star Ratings report, Bluestone has also won multiple awards from within the industry as well as from outside agencies such as Money and Your Mortgage magazines.

Bluestone was a founding member of Senior Australians Equity Release Association of Lenders (SEQUAL), a not-for-profit member organisation dating from January 2005. As such, the company adheres to a prescribed code of conduct, including the requirement that prior to signing the final loan documents, each borrower must obtain legal advice from an independent solicitor of their choice.

Bluestone also encourages pensioners considering a reverse mortgage to consult with a financial advisor and with a Centrelink representative, as well as with one’s family members, prior to finalizing any loan.

Funded by Barclays, one of the world’s largest financial institutions, Bluestone offers a flexible program with six different packages, based upon the sort of interest rate and equity access selected, plus an additional package designed for funding accommodation bonds.

For the reverse mortgage packages, interest rates can be variable, or capped or fixed for the life of the loan. The interest rate on any amount taken as a lump sum can be split between more than one option.

Most Bluestone packages can be taken as a lump sum, an ongoing income stream, a line of credit that can be left unused until needed, or some combination thereof.

For the accommodation bond package, the interest rate is fixed for the life of the loan, which is not payable until the bond is returned. With this package, of course, one is not required to inhabit the home, which can be rented out to generate income.

The minimum loan amount is currently $30,000. Up to 20% of the equity in one’s home can be protected from repayment of the loan upon discharge. The maximum LVR is 45% and varies with the age of the borrower.

There is a portability option should one wish to move house; however, conditions apply.

Bluestone has an unconditional no negative equity guarantee. Although the contract can be breached, it generally requires active fraud on the part of the borrower or willful damage to the property, as now required by SEQUAL (beginning in January 2008).

The upfront loan origination fee includes the cost of an initial valuation; the fee and the cost of the valuation are waived if the amount of the loan is greater than a certain amount, currently $100,000.

An ongoing property valuation is required every three years. The current cost of this valuation is $200, and the amount is added to the principal of the loan.

Bluestone charges no monthly maintenance fees. Early repayment can trigger a “break fee.” Other fees include an upfront loan origination fee; and a fee for redrawing the loan should additional funds be requested as advancing age raises the LVR, which fee is also added to the principal of the loan.