Over Fifty Group Seniors Home Equity Release Loan (SHERL)

The Over Fifty Group, commonly referred to as OFG, was founded in 1980 as the Over 50’s Friendly Society, and remains dedicated to meeting the needs of Australia’s senior community. OFG entered the reverse mortgage market in December 2006 in collaboration with the ANZ Bank, offering a product called the Seniors Home Equity Release Loan, or SHERL.

OFG is a member of Senior Australian Equity Release Association of Lenders (SEQUAL), a not-for-profit industry member organisation that accounts for fully 92% of Australia’s reverse mortgage market. SEQUAL does require a strict code of conduct from its members; by joining the organisation, OFG has agreed to abide by that code.

Like all SEQUAL members, OFG offers a no negative equity guarantee, and requires homeowners to consult with a lawyer prior to signing the formal loan documentation.

SHERL was awarded a four-star rating by Cannex in their inaugural October 2007 Reverse Mortgage Star Ratings report.

Unlike other companies offering reverse mortgages, OFG’s minimum age is 55 years rather than 60. Homeowners are not required to live in the house carrying the reverse mortgage. Therefore, OFG reverse mortgages can be applied to investment or vacation houses; or the homeowner can access the property’s equity to fund an accommodation bond, move into an aged-care facility, and rent out the family home to generate additional income.

OFG offers three different packages based upon differing interest rates: variable, fixed for four years, and fixed for the life of the loan. The drawdown is accessible as a lump sum, as monthly payments, or a combination of both.

SHERL’s upfront loan origination fees and interest rates are competitive. There are no monthly maintenance fees. A portable loan option is available.

OFG will provide a reverse mortgage to homeowners with an outstanding mortgage, but require that the original mortgage be paid out with the equity accessed. This makes the package attractive for pensioners who do not wish to continue making mortgage payments after leaving the workforce.

The maximum loan-to-value ratio is 50%, and 20% of the homeowner’s equity can be protected as an inheritance or to provide an accommodation bond after discharging the loan.

An ongoing valuation of the home is required every three years. The homeowner is charged for this valuation and the fee is rolled into the loan.