Live the life you ve earned

Transcription

1 Keep in touch. Drop in to any ASB branch Call Visit asb.co.nz/homeplus Visit us at facebook.com/asbbank Follow us on twitter.com/asbbank Live the life you ve earned Your guide to HomePlus asb.co.nz ASB Bank Limited

2 HomePlus at a glance One of the best things about retirement is the time it gives you to enjoy the things you love family, hobbies, travel, the list goes on. One thing that can hold you back from enjoying your well-deserved retirement is a lack of money. You may have money locked up in your home, rather than in your pocket where you need it most. That s where a HomePlus loan can help you to live the life you ve earned. What is HomePlus? Best described as a reverse mortgage or equity release loan, it lets you access the money or equity built up in your home while continuing to live in it for as long as you want to. Withdraw a lump sum, or draw down smaller instalments as and when you need them with no need to make regular repayments. The loan is repaid when you no longer live in your home. HomePlus is best suited to people 65 years or over who own their own home. Peace of mind ASB is committed to complying with the Home Equity Release Code of Standards published by the Office of Senior Citizens (part of the Ministry of Social Development). Although this is a voluntary code, we have chosen to comply, which means greater protection for you. Key features & benefits of HomePlus a) Our No Negative Equity Guarantee means you will never have to pay back more than the sale price of your home, even if your total HomePlus loan (including interest) is more than the value of your home. b) The Equity Protect option allows you to protect up to 50% of the equity you hold in your home. This means that at the end of the loan you are guaranteed the portion of equity you ve chosen to protect, no matter how much you owe. c) We offer a 90 day cooling off period that works like a trial period. If you change your mind for any reason during this period simply repay any money you have borrowed along with interest owing. The loan processing fee will be refunded in full. d) Our Lifetime Occupancy Guarantee will ensure that as the owner of the home you will always have the right to live in your home no matter how much you owe on your HomePlus loan. Comprehensive advice process HomePlus may not be right for everyone. There could be other options which are more suitable to you and your circumstances. To help you make the right decision we have developed a unique advice and application process. Our specially trained HomePlus Consultants are dedicated to working with you to determine if HomePlus is the right solution for you. Our advice and application process means: You will be taken through a full needs analysis to assess your current financial situation and help determine your future needs. Your HomePlus Consultant will then make a considered recommendation, which may indicate that HomePlus is not the best solution for you. These meetings are a great opportunity to ask any questions you may have. More details on our comprehensive and unique process can be found on page 23. HomePlus costs There are downsides and costs that apply to this type of equity release loan. Some of these include: Compounding Interest - as you are not required to make regular repayments on the loan, interest will add up over time and compound. This means your interest payments will be added to your loan each month and your loan total will increase over the life of the loan. There are other fees that will be incurred to set up and maintain access to your HomePlus loan. For more information on these and the impact of compounding interest see pages Please take the time to read through this guide in detail, it will give you a wealth of knowledge on HomePlus, including setting out your responsibilities as a HomePlus customer. It will enable you to determine if HomePlus could help you live the life you ve earned. 2 3

3 Contents 06 What is HomePlus? 06 How a HomePlus loan can help you unlock the money tied up in your home. 07 Check out some case studies on how HomePlus can help you live the life you ve earned. 08 How we ll look after you 08 Along with our exclusive and robust advice process there are a number of guarantees and features in place to help protect you. 08 No Negative Equity Guarantee. 09 Equity Protect option. 11 Lifetime Occupancy Guarantee. 11 Things you need to do to keep your guarantee day cooling off period. 12 Independent legal advice. 13 Our commitment to the Code of Standards. 14 How HomePlus works 14 How much you can borrow and who can apply. HomePlus loans can be tailored to work for your individual situation. You can choose how you are paid and you will not be required to make repayments. A HomePlus Consultant will help you to determine the best solution for your needs and introduce you to the tools set in place to keep track of your loan. 18 What will HomePlus cost? 18 Every HomePlus loan is unique. The cost will depend on the amount you borrow and the length of time you hold the loan. 18 Compounding interest. 20 Fees and charges. 20 Other costs. 22 The HomePlus advice & application process 22 Is HomePlus right for you? 23 How to apply for HomePlus. 26 What are your responsibilities? 26 There are a few important things that you will need to commit to as a HomePlus customer. 29 Where to from here? 29 We strongly recommend that you talk to family and independent advisors when considering your financial options. 30 Code of practice 30 More detailed information on the voluntary code of practice and how HomePlus has been built to comply with this code for your protection. 32 Definitions 32 Find detailed definitions of important terms in this brochure. 34 Handy answers to commonly asked questions 34 Remember, if you have any questions that are not covered in this brochure you can call a HomePlus Consultant for a free, no obligation chat.

4 What is HomePlus? Unlock the money in your home HomePlus is a special type of loan that lets you make the most of the value, or equity that s built up in your home, without having to sell it. By using your home as security, HomePlus lets you borrow some of the money that s tied up in your home. You don t need to make any repayments; you simply pay back the loan and the interest when you sell your home or pass away. Although you can borrow a useful sum of money, your home will always be your home and you can continue to live there for as long as you want to. Best of all, your reasons for choosing HomePlus are yours and yours alone. So whether you need the money for unexpected medical expenses, home renovations, or to visit family HomePlus could be your key to getting the extra flexibility you need. More about this type of loan.there are two main types of products that let you use equity in your home. The most common is a home equity release loan also referred to as reverse mortgage scheme and allows you to borrow an amount against your property. 1. The borrowed amount is secured by a mortgage over your property and interest is charged and is added (also referred to as compounding interest) to the principal loan amount over time until the loan is eventually repaid. This usually happens when the borrowers pass away, the property is sold or if the borrowers move out. This is how HomePlus works. 2. Other products that let you use equity in your home use shared equity release or reversion schemes, which require all or part of the home to be sold to a third party. With shared equity or reversion schemes, the original owner is then given part of the sale price in advance and is granted occupancy as a tenant. HomePlus is not this type of product and through HomePlus, ASB will never own any part of your home. Will I still own my home? Yes. You will always remain the owner(s) of your home, and (unless changed by you) your living arrangements will stay the same. This means you keep the title to your property, and can also choose to sell up at any time. The amount you borrow through a HomePlus loan is secured by a mortgage over the property, like a normal home loan, which must be paid back when your home is sold or you pass away. HomePlus could help you live the life you ve earned Stay in the home you love Do the things you ve always wanted to Pay unexpected bills Have rainy day money for peace of mind Pauline is 78. Her husband died a few years ago and she lives in the family home they shared. Pauline has started finding it hard to live on her pension while keeping up the maintenance on her home but does not want to move away from her family and friends. She asked for financial advice, and was given some options including selling up, downsizing or moving to a cheaper area. If Pauline chose HomePlus she would be able to borrow enough to pay for the home repairs, so she could keep the home she loves and stay close to her friends and family. Steve and Ann are 73 and 70. They ve worked hard to raise four children and buy a big house. Now that the kids have grown up and moved away, they d love to do a few things around the house to modernise it. With HomePlus, Steve and Ann can borrow more than enough to do up their home. They could choose to use a little now to do up the house, leaving them the flexibility to dip in to what s left at a later date to visit their children and grandchildren overseas. Interest would only be applied to the amount they ve drawn down to use. Ravi is 67. A few years back, Ravi was told he needed a hip operation. As he didn t have the money to pay for his operation privately, he would need to wait a good 12 to 18 months. However, as time went on he was experiencing more and more pain and did not want to wait any longer. With HomePlus, Ravi would be able to borrow more than enough to pay for the operation at a private hospital and meet any additional ongoing medical expenses. Sue is 68. She has worked hard all her life and decided to pay off the remainder of her mortgage with her savings that were set aside for retirement. Unfortunately, this has left her with very little money to cover day-to-day living costs or unexpected bills. A HomePlus loan could allow Sue to keep her independence by making regular payments into her transaction account, and have money on call for car repairs, home maintenance and enjoying her retirement while still staying in her home. 6 7

5 How we ll look after you Your home is yours and we ll keep it that way With a loan like HomePlus, some people have concerns about the amount of interest adding up (compounding) over time and the effect of this on the amount of equity remaining in their home. How long you live and any changes in interest rates or property values can effect the amount you might have left. So here are some special features and guarantees we ve put in place with HomePlus to put your mind at rest. No Negative Equity Guarantee You won t repay more than what your home is worth. We guarantee that you won t have to repay more than the proceeds from the sale of your property at the time the loan is repaid in full, provided that you have met the HomePlus terms and conditions (please read the section on What are your responsibilities? page 26 for more details). Here s an example of how it works: If your property has sale proceeds of $300,000, then with our No Negative Equity Guarantee, the amount you repay won t exceed $300,000. This means that if the loan amount on your HomePlus account with interest and fees is more than $300,000, and is instead for example $310,000, you will not have to repay the remaining $10,000. This will give you the comfort of knowing that your estate will not be liable for anything more than the value of your home at the time. Value of your house when sold. Your total HomePlus loan. What you will have to repay with ASB s No Negative Equity Guarantee. Equity Protect option Keep up to 50% of your home s value. We think it s important that you have the option to protect some of the equity in your home, especially if you want to be able to leave something to your estate. That s why HomePlus will allow you to protect up to 50% of your equity. This means that at the end of the loan you are guaranteed the portion of equity you ve chosen to protect no matter how much you owe. You can choose to protect between 10% and 50% of your home s equity (in 10% increments). There is no extra cost to use Equity Protect, but if you choose this option, then the amount you are eligible to borrow will be reduced. Here s an example of how it works: Assuming you are aged 65 and have a home valued at $300,000: Your HomePlus loan with No Equity Protect. You are eligible to borrow 15% of the home s value, which is $45,000. Value $300,000 $45,000 loan Your HomePlus loan with 20% Equity Protect. You elect to protect 20% of the equity in your home, this will reduce the amount of value in your home you can borrow against by 20%. So that means you can borrow up to $36,000. Value $300,000 20% Protected $36,000 loan House value is $300,000 x the percentage you are eligible to borrow (15%) = total loan amount you can borrow $45,000 House value $300,000 less 20% of the equity you choose to protect ($60,000) = $240,000 to be borrowed against. The unprotected amount $240,000 x the percentage you are eligible to borrow 15% = total loan amount you can borrow $36,000 $10K $0K $300,000 $310,000 Your loan amount includes the total amount borrowed, plus all interest and fees accrued over the time of the loan. $300,000 Because of the no negative equity guarantee the $10,000 owing over this does not need to be repaid to ASB. If you ve chosen our Equity Protect option, we ll make sure that you will always receive a minimum of the Equity Protect percentage of your home s sale proceeds. This also means that you will never have to repay more than the amount you have left over (which is the unprotected amount), provided that you have met the HomePlus terms and conditions (please read the section What are your responsibilities? page 26 for more details). 8 9

6 Here s another example to show how Equity Protect works in conjunction with the No Negative Equity Guarantee: Assuming your property has sale proceeds of $400,000 and you ve chosen to protect 20% of the equity, then the protected value that you will receive from the sale is a minimum of $80,000. The remaining sale proceeds of $320,000 will be used to repay your HomePlus loan. The No Negative Equity Guarantee ensures the amount you repay us does not exceed the unprotected amount of $320,000. Your Loan Amount at the time of sale $340,000 Your home sold 20% Protected Sale proceeds = $400,000 of which 20% is protected What you repay with ASB s No Negative Equity Guarantee & Equity Protect $20K $320,000 $20,000 ASB covers remaining amount $80K $80,000 You keep the protected amount Lifetime Occupancy Guarantee Your home will always be your home. With a HomePlus loan, as the owner of the property you have the right to live in your home for your lifetime. This is regardless of the amount of the loan, the accrued interest or the value of your property, provided that you have met the HomePlus terms and conditions. Together with the No Negative Equity Guarantee you can have absolute peace of mind that not only will you be guaranteed the right to occupy your home for your lifetime no matter how much you owe, you will also never have to repay more than the proceeds from the sale of your home (as long as you have met the HomePlus terms and conditions). Things you need to do to keep these guarantees. We ve designed HomePlus with the No Negative Equity, Equity Protect and Lifetime Occupancy Guarantees to protect you. While this is a risk to us, it s one we can manage. Of course what it means is that there are things you must do to keep these guarantees. You must: Provide complete information that is true and accurate about your circumstances when you apply for the loan and after your loan is put in place; Tell us of any material changes to your circumstances during the term of the loan; Continue to look after your home, making any necessary repairs as required to keep it in the same state it was when you took out HomePlus and protect it to ensure it is not deliberately damaged; Always adequately insure your home to protect against any loss or damage; and Not go over your HomePlus limit. This could happen if you didn t pay your rates and/or insurance and ASB had to make these payments on your behalf and you do not reimburse us on demand. If you fail to keep to these promises above, ASB can stop part or all of the guarantees to you and require an additional payment and include any costs or expenses ASB incurs in enforcing our rights under your HomePlus terms and conditions or mortgage

7 90-day cooling off period It s okay to change your mind, even after you ve signed. It s really important to us that you re happy with your decision to have a HomePlus loan. That s why we offer a 90-day cooling off period a bit like a trial period. The 90 days start on the day your HomePlus loan limit is established, you then have 90 days to see if HomePlus is right for you. If you decide, for any reason that it s not, simply return the money you ve used along with any interest owing and we ll refund the loan processing fee. Can I cancel the loan at anytime after the cooling off period? Yes, you can cancel the loan at anytime. If this is after the 90-day cooling off period you will need to repay the total money you owe (this is the amount you ve transferred and any fees and interest you ve incurred since the loan account was opened). You will not be charged a cancellation fee, however we will not refund the loan processing fee. Independent legal advice Our best advice is always get plenty of advice. As part of ASB s commitment to ensuring you make the right decision and have taken all the necessary steps to ensure you are protected, you will be required to seek legal advice from an independent solicitor. This is to make sure you re comfortable with the product, you fully understand the terms and conditions and your obligations. We also recommend you discuss any important financial matters with your family and a financial advisor. Making a decision when it comes to your future deserves serious thought and discussion, and your family, solicitor or other advisors will help you consider the pros and cons of all your options. Code of Standards Our commitment to the Code. The Office of Senior Citizens (OSC), who are administered by the Ministry of Social Development, has published a Home Equity Release Code of Standards (the Code) for home equity release providers to protect people considering taking out these types of products. Although the Code is voluntary, ASB has made the commitment to comply with the Code, including offering you a no negative equity guarantee, lifetime occupancy guarantee and 90-days to change your mind after signing up. Further details on how we comply with the principles of the Code are on page 30. For a full copy of the Code, please visit osc.govt.nz We will give you a copy of the Code as part of the application process. Application process To determine if HomePlus best suits your needs you will meet with a dedicated HomePlus Consultant who will take you through a unique six step process. A full outline of the process is on page 24. HomePlus may not be right for everyone. There could be other options which are more suitable to you and your circumstances. To help you make the right decision we have developed a unique advice and application process. Our specially trained HomePlus Consultants are dedicated to working with you to determine if HomePlus is the right solution for you

8 How HomePlus works Who can apply? HomePlus is best suited to people 65 years or older. You must be a New Zealand resident, own and be living in your own home. All borrowers will need to be legal owners of the property listed on the title. The property can t be owned by a trust, partnership or company. For joint applications, both borrowers will need to be legal owners of the property and listed on the title. Ideally your home should be mortgage free. However, if there s still a small mortgage remaining you could use a HomePlus loan to settle this amount and free you from those regular repayments. There are some property types that won t usually qualify for HomePlus, such as farms, lifestyle blocks, holiday homes, vacant land, retirement homes, and leasehold property. For clarification on property types please contact a HomePlus Consultant on Use our handy online calculator to help you work out how much you can borrow at asb.co.nz/homeplus How much should I borrow? That s largely up to you. You don t need to borrow the full amount available. How much you choose to borrow depends on a number of things. A HomePlus Consultant can help you work out what you need now and in the future and look at the impact of the loan and compounding interest on the equity in your property. You do not have to use the full amount you choose to borrow, and interest will only apply to the portion of the loan you draw down. Together you should be able to work out an amount you re comfortable with. How much can you borrow? The amount you can borrow with HomePlus is a set percentage of your home s value. The minimum loan amount is $10,000. At age 65 you can borrow up to 15% of your home s value. This increases by 1% each year to a maximum of 30% of your home s value. The table below shows how it works as well as the maximum loan values that apply. Once your HomePlus limit has been approved and established you can either choose to draw down the full amount available, or you can simply transfer money as and when you need it, or set up a regular amount to go into your transaction account. Youngest applicant Percentage of your home s value you are eligible to borrow Minimum HomePlus loan value Maximum HomePlus loan value (Subject to acceptable security) Age 65 15% $10,000 $150,000 Age 70 20% $10,000 $200,000 Age 75 25% $10,000 $250,000 Age % $10,000 $300,

9 Get the money you need, when you need it When you take out a HomePlus loan, we ll set up a HomePlus loan account for the amount you have chosen to borrow. Then you can simply withdraw what you need to an ASB transaction account. This helps you keep track of the money you re using and also means that you ll only get charged interest on the amount you ve drawn down from your HomePlus account rather than the total amount you could borrow under your HomePlus limit. For example, if you choose to borrow $20,000 but only withdraw $1,000, you will only be charged interest on $1,000. This means that you have access to the remaining $19,000 in your HomePlus account if you need it without having to worry about the interest adding up on the money you haven t used. You can choose whether you d prefer to use your loan by withdrawing a lump sum, by drawing money down when you need it, or by setting up a regular automatic payment (AP) to your ASB transaction account. It s easy to move money from your HomePlus loan account to your ASB transaction account by Calling to speak to a HomePlus Consultant Going online to FastNet Classic at asb.co.nz Visiting your nearest ASB branch Keeping track of your loan To help you keep up-to-date with your HomePlus loan, you will receive a statement each month summarising the money you have borrowed, the interest and fees you ve been charged and how this stacks up against the value of your home. This information is also available online via internet banking anytime with FastNet Classic at asb.co.nz You can check your account balance by visiting your nearest ASB branch, calling to use FastPhone or logging on to FastNet Classic at asb.co.nz Paying back your loan Your HomePlus loan is designed so that you don t need to make repayments. Instead your HomePlus loan and any interest accrued, only need to be paid back when you no longer live in your home. As long as you have met the HomePlus terms and condition this is usually when your home is sold so you can move into alternative accommodation, or when you pass away. With HomePlus you can also make payments into your HomePlus account at any time. Any repayments you make will reduce the amount of interest that s charged to your account. There is no minimum amount that you need to pay, and any money that you do pay back can be borrowed again if you need it. With HomePlus there are no penalties if you want to make repayments or pay off the loan early. We do need you to tell us if you want to reduce and cancel your HomePlus loan limit, either in part or in full. In summary: No need to make repayments on the loan. Repay the loan and any interest accrued in full when you no longer live in your home. Tell us if you want to reduce and cancel your HomePlus loan limit either in part or in full. What happens if I pay back the entire loan, can I borrow the money again? Yes, if you pay the entire loan (but decide not to request a discharge of the mortgage) and find you need the money again, you can still withdraw up to your HomePlus loan limit at any time. However if you pay back the entire loan, and request a discharge of the mortgage you ll need to reapply for a HomePlus loan. I want to sell up and move into a smaller home, do I need to repay the loan? If the new property meets ASB s security requirements, then the security can be transferred and the loan will remain in place. However, if the loan balance is greater than the maximum your new property will allow, you ll need to repay the difference. Can I access money directly from my HomePlus loan account? No, with HomePlus you will need to have an ASB transaction account set up to be able to access your HomePlus loan. When you want to use your HomePlus loan you simply transfer the amount you need to your ASB transaction account. If you don t already have one, our team can help you set up the right kind of account

10 What will HomePlus cost? The interest charged on your loan Like any loan, you ll be charged interest on the money you borrow. The interest rate charged for HomePlus is a variable rate and is higher than ASB s housing variable interest rate. That s because the HomePlus interest rate covers the special features and services associated with this type of loan. These include: The comprehensive advice process we take you through before you decide whether HomePlus is right for you; The No Negative Equity Guarantee, where we guarantee that you will not owe more than what your homes value and that we will bear any difference; Lifetime Occupancy Guarantee, where, no matter the size of the loan, we guarantee you can live in your home as long as you want to; No interest payments are required until the end of the loan; and You won t be charged a monthly fee. Interest charged on the outstanding balance (which includes interest from previous months) is calculated daily and added to your HomePlus loan account each month. Interest calculations are based on a 365 day year. To find out the latest HomePlus interest rate visit your nearest ASB branch, call , or visit asb.co.nz/homeplus (this variable rate may change with market rate changes). Here s an example on how compounding interest works: Sue, who was widowed two years ago, needed a HomePlus loan of $10,000 to repair her home. She borrowed this all as a lump sum using an interest rate of 10%. Within the first month of taking out this loan, Sue owed $10,084 which included the loan amount and the interest charged. By the end of year one the monthly interest charged had increased the total loan amount owing to $11,054. While Sue didn t need any further money over the following years, her loan continued to increase every month and by year 10 her initial loan of $10,000 had grown to $27,175. And by year 15 this continued to increase to $44,753 from interest accrued over that time. The graph shows the impact of the interest charged to Sue s loan of $10,000 with an interest rate of 10%, over a 15 year period. $45,000 $40,000 $35,000 Sue s loan amount over 15 years $44,753 Compounding interest will add up over time Unlike other home loans, you don t have to make loan repayments with HomePlus. This means interest will add up over time and will compound. In other words, interest charged on the loan will be added to your total loan balance each month. The next interest amount will be calculated on the total loan balance, not the original loan taken out. This means you will be paying interest on top of interest, hence the compounding effect. This will make a difference to the level of equity you ll have left in your home at the end of the loan. For many people this is a potential drawback of this type of loan, so it s something you should think carefully about. $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Years Loan amount borrowed Interest charged monthly Compounded interest A HomePlus Consultant will show you the impact of interest on your loan or use our online calculator at asb.co.nz/homeplus 18 19

11 Fees and charges with HomePlus There are some fees and charges that are involved in setting up and maintaining your HomePlus loan. A handy tip about fees If you have New Zealand National Superannuation, War, Widows or Army pension payments paid directly to an ASB Omni account, up to $20 per month is exempt from transaction fees on the account receiving the payment. Loan processing fee $850. Registered valuation fee (typically from around $500) Independent legal fees (typically from around $1,000) This covers the cost of ASB processing your application. This fee will be deducted from your HomePlus account once your loan account is set up. The value of your home plays a large part in how much you can borrow. We require you to get an independent registered valuation before your loan can be approved, which you will need to pay for. You will be required to obtain independent legal advice as part of the application process, which you will need to pay for. What happens if I owe ASB more than my home is worth? You won t. One of the benefits of HomePlus is the No Negative Equity Guarantee. As long as you have met the terms and conditions of HomePlus, you ll never have to repay more than the sale proceeds you receive from your home. Even if your HomePlus loan is more than the value of your home, the Lifetime Occupancy Guarantee means that you will not have to move out of your home until you choose to move, or you pass away. There is more on our No Negative Equity & Lifetime Occupancy guarantees on page 8. Other costs of ASB HomePlus There are additional costs which you may need to arrange and pay for as part of the terms of your HomePlus Loan. Top up fee $150. If you wish to borrow more, we will need to re-assess your situation and determine whether you are eligible for a top up. This fee will be deducted from your HomePlus account at the time we process your top up. Service fees These are additional fees that may be charged to your loan. You ll find all fees outlined in ASB s Guide to Fees and ASB s Home Loans & Personal Loans Guide to Fees available from your nearest ASB branch or at asb.co.nz Subsequent valuations (typically around $500) We may require you to obtain further valuations during the life of your HomePlus loan

12 The HomePlus advice and application process Is HomePlus right for you? The answer to that question might not be obvious. Equity release loans like HomePlus are a useful way to unlock the money you have tied up in your home, but they do have their downsides. Here are some questions you should ask yourself before you commit to a loan like HomePlus: Do you have other assets you could cash up, like investments, managed funds or term deposits? Do you have a holiday house or second property you could sell instead? Could you sell or downsize your home instead? How much money do you need? Is it enough to take out a HomePlus loan, or is there another loan option you could consider? Do you really need to borrow money now or could you delay borrowing until a later date? Have you done a budget to see if there are things you can cut back on? What s your long-term plan? For example, you might want to take out a loan like HomePlus now but downsize in a few years. This could help you stay in your own home now but move to a smaller place that better meets your needs as you get older. What are your possible future needs? If you need to move to aged-care accommodation down the track, will you have enough money? How to apply for HomePlus Here s how we ll work with you Taking out a loan like HomePlus is something you should take very seriously. That s why we ve devised a special advice and application process. We think this is the best way to make sure you understand all your options and have the chance to thoroughly think over the pros and cons of this type of loan, such as compounding interest and its implications on your property s equity. Similarly, this type of application process gives us the chance to get to know you, assess your needs, answer any questions and make sure HomePlus is right for you. Most important of all, it gives you enough time to talk to your family, seek independent advice and really get to know what a HomePlus loan will mean for your financial position. You can meet with us at your local ASB branch or in the comfort of your own home whichever works best for you. Also, you are welcome to bring along a family member, a friend, or an independent advisor, such as a solicitor or accountant to these meetings. The most important thing we ll do is listen The HomePlus application process 01 Getting to know you - Lots of talking and getting to know you. Taking you through a needs analysis review. What about your family? Maybe your children can help out instead, or could they make repayments to your HomePlus account to reduce the impact of HomePlus on the equity in your home? If you receive or plan to apply for any of the following: Disability Allowance, War Veterans or Residential Care allowances, we recommend you contact Work and Income New Zealand (WINZ) to determine the effect HomePlus could have on these or similar types of assistance Talking over options - Considering scenarios and whether HomePlus is the solution for you. We will propose a recommendation. Time to think - Your time to read through the information provided, talk to you family and advisors. Questions, Questions, Questions - We ll answer your questions and help you through the process. Our recommendation will be finalised and agreed. Signing the paperwork - You accept our recommendation. You ll need to get an independent registered valuation on your property. You will also need to consult your solicitor. Keeping in touch - You ll receive regular monthly statements and we re here to help you with any queries you have 22 23

13 01: Getting to know you When you first meet with one of our HomePlus Consultants, the first thing they ll do is present a copy of their disclosure statement. This disclosure statement tells you all the important things you need to know about them. We ll then ask a lot of questions and take you through a needs analysis to review your current financial situation and establish what your future needs might be. We ll listen to exactly what you have to say. This is really important, because every customer is different. Most first meetings take about an hour and like all your dealings with ASB, anything you discuss remains totally confidential. This first meeting is also a good opportunity to think about whether the Consultant is someone you re happy to continue dealing with. If not, you re more than welcome to ask for someone new. If you choose to continue with the HomePlus application process, and we feel that HomePlus is right for you, we will set up a second meeting to talk over your options. 02: Talking over options This step involves discussing the general features of home equity release schemes, as well as more detail about how HomePlus works. We ll also help you compare HomePlus against other similar products in the market. Your HomePlus Consultant will present recomendations to you based on whether HomePlus is suitable. If it is then they will put together at least three scenarios based on the information you ve provided and discussed. These scenarios will show how changes in interest rates and property prices might affect the equity you ll have in your home both now and in the future. If HomePlus doesn t seem right for you, we can also help you look at other options. 03: Time to think You can take as much time as you need to think, read through the recommendations we ve provided, consult with your advisors and talk things over with your family. 04: Questions, questions, questions Having chatted things over and had some time to think, it s very likely you ll have some questions. Your HomePlus Consultant will be happy to answer these at anytime. This can be arranged over the phone, via , or in person when you meet with your Consultant. The most important thing in the whole process is that everyone is happy that HomePlus absolutely meets your needs and is the best solution for you. If you choose to accept a HomePlus loan, the details will be finalised and agreed and we will begin the paperwork process. 05: Signing the paperwork At this point, you will need to get an independent registered valuation of your property (if you haven t already). If your property s valuation is satisfactory and you meet all our lending criteria, the loan documents will be sent to your solicitor for you to sign. If you choose to proceed with the HomePlus Loan, you will need to sign the Application to Proceed and your Needs Analysis form. This is to confirm the information you have provided is accurate and you wish to proceed with the HomePlus Consultant s recommendations. From here you will be sent a Conditional HomePlus Loan Offer. This along with a copy of the final recommendation document, HomePlus Terms and Conditions and a HomePlus brochure will go to your Solicitor for review. You and your solicitor will need to sign acceptance of this conditional offer. You will receive a follow up phone call from our Personal Credit Unit who will confirm that the features and responsibilities specific to HomePlus have been clearly explained to you by your HomePlus Consultant. The HomePlus loan documents will then be sent directly to your solicitor for signing. Once the loan documents are signed your HomePlus loan is registered and advanced. Remember, our 90 day cooling off period means that you have 90 days to return any money used and interest owing and we ll refund the loan processing fee. Once you ve signed and sent back these documents your HomePlus loan account will be all set for you to start using the money. 06: Keeping in touch Our job doesn t finish once your HomePlus account is opened. We re always available to answer any questions you have about how it s going. You ll receive a monthly statement showing you exactly how much you have borrowed and how much you can withdraw along with the interest which has been added to your HomePlus loan. You can check your loan details any time online through FastNet Classic, our Internet banking service. We ll also be on hand when you re ready to review your plans. This is especially important if your circumstances change, you want to move house or you need more money. How long will the application process take and what s involved? Typically it could take around a month to go through the 6 step process. This is to make sure you fully understand HomePlus, how it works, the impact of compounding interest and its implications on your property s equity

14 What are your responsibilities? Terms and Conditions If you choose to take out a HomePlus loan, there are some important things that you need to commit to. House insurance: You must have full replacement house insurance in place for the duration of your loan. You will need to provide proof of your insurance as part of your application. We may ask for proof of your insurance from time to time. Pay all rates: You must pay all council rates by their due date. You cannot postpone your rates or agree to a rates holiday with your local authority while you have a HomePlus loan. Property maintenance: You need to keep your house and land in good condition. This may mean making repairs or fixing things up if we ask. As part of the HomePlus terms and conditions, we can arrange to inspect or value your house up to once a year at your cost (except if there is an emergency or where you have breached any of the HomePlus terms and conditions then we may need to inspect or value your house more than once a year). Live in your home. You need our prior consent if you do not intend to live in your home (for example, if you move into aged care or rent out your home) or if you plan to travel and be away from your home for more than a total of 6 months in a 12 month period. Your responsibilities are important These responsibilities are a summary of what you will need to do and are set out in full in the HomePlus terms and conditions. If you are unable to meet them, or you don t tell us about something that s important, it may mean we are unable to honour your No Negative Equity, Equity Protect and Lifetime Occupancy Guarantees and we may be entitled to take possession of and sell your property. If you have any questions, we re more than happy to help. Just call or chat these things over with a HomePlus Consultant at any time. The HomePlus Terms and Conditions will be given to you with your HomePlus contract. It is important that you fully understand these and seek legal advice before agreeing to the Terms and Conditions. We have highlighted some of the conditions below and provided a translation into plain English. What is in your HomePlus Terms and Conditions Our rights to recovery against you are limited to the property, and if your Facility Schedule shows a Protected Equity Portion you only have to pay us (or will be liable to us for) the Net Sale Proceeds less the Protected Equity Portion even if you owe us more, but we may require you to pay additional monies to us (which monies we may deduct from your Protected Equity Portion) if: You provided a representation or warranty that was incorrect or misleading; or you gave us incorrect or misleading information in connection with the Contracts before or after you signed the Contracts; or You do not maintain, or you willfully damage, the Property; or What this means You will only repay your HomePlus loan when your property is sold. The amount you repay will not exceed the value of your sale proceeds. If you have protected some of your equity in your home you will receive this amount regardless of your loan balance providing you have met the Terms and Conditions. If you have not met the HomePlus Terms and Conditions we may require extra money from you which can be deducted from the protected equity portion. You must provide complete information that is correct and true about your circumstances when you apply for the HomePlus loan and after the loan is in place. You must tell us of any changes to your circumstances during the term of the loan. You must continue to look after your home, making any necessary repairs as required to keep it in the same state it was when you took out the HomePlus loan and protect it to ensure it is not deliberately damaged. Why do you need to do inspections or value my home? Your home is security for the money ASB lends, so one of your responsibilities with a HomePlus loan is to make sure your home and land are regularly maintained. Having regular valuations or inspections of the property is one way we can make sure that everything is as it should be. Usually we would only need a regular formal valuation when the size of your loan becomes large compared to the value of your home. Keeping up-to-date with property valuations is a good way for you to know how much equity you have in your home so you can make more informed decisions about your finances. Any Major Damage occurs to the Property which is not fully covered by insurance which meets our insurance requirements; or Your Facility Account is overdrawn in excess of your Facility Limit, and you fail to immediately repay that overdrawn amount or excess (including any default interest payable) and then only that excess; or We incur any costs or expenses in enforcing our rights under the Contracts or Security. You must always adequately insure your home to protect against any loss or damage. You go over your HomePlus loan limit. This could happen if you didn t pay your rates and/or insurance and ASB had to make these payments or any others on your behalf. If you fail to keep to the promises above, we can stop part or all of the guarantees to you and require additional payments including any costs or expenses we incur in enforcing our rights under your HomePlus loan agreement or mortgage

15 Notes Where to from here? Get more information You can never have enough information when it comes to loans like HomePlus. That s why we encourage you to talk to other independent advisors such as your accountant, financial or legal advisor when considering all your options. We ve also found some useful resources that may come in handy: Office of Senior Citizens osc.govt.nz where you ll find a copy of the Code of Standards for home equity release providers. Retirement Commission retirement.org.nz Sorted sorted.org.nz The above websites may be of interest to you. By listing these, this does not mean ASB necessarily endorses these sites or their content. Talk to your family Before making any decision about HomePlus, you will be required to consult with an independent legal advisor to make sure you fully understand HomePlus. We also thoroughly recommend you discuss important financial matters like this with your family. Get in touch with ASB Get in touch with our team for a free, no obligation chat. Our HomePlus Consultants can answer any questions you have and talk you through HomePlus in more detail. To make an appointment with a HomePlus Consultant Call Visit asb.co.nz/homeplus Go into your nearest ASB branch 28 29

16 The Code of Standards ASB has made a commitment to comply with the voluntary Code of Standards, published by the Office of Senior Citizens. The Code is based on seven principles. You can read these below along with how HomePlus complies. We ll give you a full copy of the Code of Standards as part of the HomePlus application process, but if you d like to read it now you can get one from osc.govt.nz. Code of Standards principles How ASB complies Code of Standards recommendation How ASB complies Consumer Understanding Potential consumers need to be provided with information that helps them to understand the products, how they work, and what they would cost over the lifetime of the consumer. This comprehensive guide includes everything you need to know about HomePlus including the potential downsides of a loan like this. This information is also available online at asb.co.nz/homeplus Our team will take you through the process step by step, so you know exactly what to expect. Our online calculator will provide you with a personalised account of what the cost over the lifetime of the loan could be. Lifetime Occupancy Guarantee A consumer must have the right to remain in their home until they choose to leave it. Independent Legal Advice Consumers must obtain independent legal advice before any agreement is signed. ASB offers a Lifetime Occupancy Guarantee. This means you can live in your own home for as long as you want, as long as you follow the terms and conditions of HomePlus. You will be required to seek independent legal advice before you sign up to a HomePlus loan. We also recommend you talk to your family and other advisors before applying for HomePlus. Full Disclosure Providers and their agents must disclose the terms and conditions, the charges and costs for consumers, the benefits for product providers and agents, and the responsibilities of each party under an agreement. All the HomePlus product benefits, the responsibilities of ASB and the customer, and what it will cost (including service fees and the impact of compounding interest) are in this guide and found online at asb.co.nz/homeplus Our team will also take you through the full terms and conditions, along with all costs if you choose to apply. Regular Updates Consumers must receive regular financial reports on their financial position under the agreement. We ll give you a monthly statement showing your outstanding loan balance, any interest accrued and the impact of your loan on your property s equity. You can also get your account balance and transaction information online at any time through FastNet Classic at asb.co.nz No-Negative Equity A consumer s liability under a home equity release scheme must not exceed the net realisable sale price for the home. ASB offers a No Negative Equity Guarantee. This means you ll never have to pay back more than the sales proceeds of your home as long as you have met the terms and conditions of HomePlus. You also have the option to protect up to 50% of the equity in your home with our Equity Protect option. This means that if you want to leave something to your estate you can as long as you have met the terms and conditions of HomePlus. Access to a Complaint & Dispute Resolution Process Consumers and other parties must have access to a complaints process and an independent and accessible disputes resolution process. We take complaints very seriously. If you feel we ve let you down in some way or you dispute some things we have done you can contact your HomePlus Consultant, visit your nearest ASB branch, call , or call our Contact Centre on If you feel that a satisfactory resolution hasn t been reached, you can ask to have your concerns passed to Customer Care Management who will investigate thoroughly, and potentially refer you to the Banking Ombudsman a free independent body who looks at referred complaints on a case-by-case basis. Full details of ASB s complaints and disputes process can be found at asb.co.nz or at your nearest ASB branch

17 A few definitions Compounding interest: This is the interest charged on your loan balance, which is added to the loan (and becomes part of the amount you ve borrowed i.e the principal part of your loan). Over time interest is charged on this interest and will increase the total amount owing at the end of the loan. Deposit: This is any money you put into your HomePlus loan account. Every deposit you make helps pay back any money that you have withdrawn and reduces your interest costs. Equity: This is the money tied up in your property. It s the difference between what you d get by selling your house and any money you have owing on it. Equity Protect: An optional feature of HomePlus that allows you to protect up to 50% of your home s value. With Equity Protect you ll be guaranteed to get back the percentage of equity you have chosen to protect, regardless of how much you owe at the end of the loan (provided you have met the terms and conditions). FastNet Classic: ASB s Internet Banking service that allows you to do most of your banking online any time from any computer that has internet access. Home Equity Release Scheme: A type of loan that allows people, who can t afford to make repayments, access to the equity in their home without having to sell their property. The loan and interest are paid back in full when the property is eventually sold. HomePlus Terms and Conditions: The terms and conditions including your loan agreement governing the HomePlus loan that you agree to abide by when signing up to HomePlus with ASB. Housing Variable Interest Rate: This type of interest rate fluctuates with the market and can increase or decrease at any time. It s also sometimes referred to as a variable interest rate. Interest Rate: This is a cost to you based on the money you have withdrawn from your HomePlus account. This is charged as a percentage per annum, which is calculated daily and charged to your HomePlus account each month. Legal Fees: A cost associated with seeking advice and using the services of a solicitor or lawyer. Lifetime Occupancy Guarantee: A feature of HomePlus that guarantees that as owners of the property, you have the right to live in your home for your lifetime, regardless of the amount of the loan, the accrued interest and the value of your property. This is in place as long as you have met your responsibilities under the HomePlus terms and conditions. Loan to Value Ratio (LVR): This is the amount borrowed compared to the property s market value. It s expressed as a percentage. For example if you borrow $150,000 on a property worth $500,000, your LVR will be 30%. Mortgage: This is a legal term that describes the security the borrower gives the lender to be registered against the title of the borrower s property. Legal ownership of the property remains with the owner, but if the owner doesn t comply with the requirements of the loan, the lender can, after giving notice and following the procedures set down by law, take steps to take possession and sell the mortgaged property to recover the debt. No Negative Equity Guarantee: A feature of HomePlus that guarantees that you won t have to repay more than the sales proceeds when it comes time to sell. This remains in place as long as you have met your responsibilities under the HomePlus terms and conditions. Registered valuation: This is an assessment of a property s market value, by an independent registered valuer. Repayments: This is an amount you pay back to a lender for money you have borrowed. For most loans, repayments of principal and interest are required on a regular basis either weekly, fortnightly or monthly. However, there are no repayments required for HomePlus. You are welcome to make payments at any time and for any amount. The full loan amount is repaid when the property is sold. Sale proceeds: This is the money remaining after the sale of the property once all expenses relating to the sale and the property are paid, such as real estate fees and legal costs. Security: This is the property that is used to secure the amount you have borrowed. Once the property is eventually sold, proceeds from the sale are used to repay the HomePlus loan. Valuation fees: The charge for a Registered Valuation. Withdrawals: This is money that you have transferred from your HomePlus account. This will also include the Loan Processing Fee (and any other subsequent fees you may incur over the term of your loan) that has been charged to your HomePlus account. Every withdrawal you make will increase the interest charged and therefore the overall amount you owe (for more information on HomePlus fees and charges, see ASB s Guide to Fees and ASB s Home Loans & Personal Loans Guide to Fees). Limit: This is the maximum amount in your HomePlus loan account that you have decided to borrow. Loan: This is the HomePlus loan facility set up which shows the amount borrowed, what you ve repaid and interest charged. Loan processing fee: The fee you need to pay for setting up the loan. This covers the cost of the advice process and the cost of ASB processing your application. This fee will be deducted from your HomePlus account

18 Answers to commonly asked questions What if I want to sell or move house? If you move house while you have a HomePlus loan, ASB will assess your new home and as long as it meets our lending criteria, you can transfer the security and carry on as usual. However, if for any reason your new home is not eligible or you don t wish to transfer the security, you ll need to pay back the loan in full. Also, if you are moving to a retirement or rest home, you will need to repay the loan first (unless, in the case of a couple, one of you wants to remain in the home). What if something happens to my partner? HomePlus is a loan based on your home s value. So as long as you jointly own your home, your HomePlus loan account will remain in place. The loan only needs to be paid back when the surviving applicant decides to sell or passes away. Can I apply for HomePlus if I still have a home loan? HomePlus may still work for you. However, your existing home loan will need to be repaid in full first. You may want to do this with savings, or with help from family. Alternatively, you may be able to pay off your existing loan with HomePlus as long as the amount you can borrow is enough to meet what you currently owe on your existing home loan. What if I need to borrow more? Just get in touch with your HomePlus Consultant and they will assess your current situation and let you know whether you will be eligible to increase your loan limit. This will depend on your age, any changes to your property s value and your outstanding loan balance. What happens if the owners on the property title change? If the owners of the property change for any reason, such as if you separate or remarry, we ll need to assess the new owner. In some cases an alteration can be made to HomePlus terms and conditions and to the security and otherwise continue on as normal. However, if for any reason the new borrowers are not eligible, the loan account will need to be repaid in full. What happens if someone else moves into the house with me? That s fine, as long as at least one of the borrowers of the loan continues to live in the property. Please let us know immediately if all borrowers decide to move out. Does my home have to be sold to repay the loan? No. If you would like to leave your home to one of your children they can buy the home from you or your estate and the proceeds can be used to pay the loan. If you pass away and leave your home to your family, they will have the option to arrange a mortgage to repay your HomePlus account and keep the home. What happens to the loan when the last borrower passes away? The estate has six months to repay the loan. They can sell the property, which they must get prior approval from ASB before doing, and the sale of the property must be at a fair market value. If the estate decides not to sell the property, the loan may be converted to a regular mortgage, subject to ASB s usual lending criteria. The interest on the loan will continue to accrue and compound while the account is being settled. Can I protect my childrens inheritance? Many of us like to know our children will still benefit from an inheritance. With HomePlus, you can choose to have up to 50% of your equity in your home protected. Simply decide what portion of your home s value is to remain untouched, and your loan will be based on the remaining value. No matter how much interest you accrue, this portion will be protected. More on Equity Protect Option on page 9. What happens if I owe ASB more than my home is worth? You won t. One of the benefits of HomePlus is the No Negative Equity Guarantee. As long as you have met the terms and conditions of HomePlus, you ll never have to repay more than the sale proceeds you receive from your home. In other words, we ll make sure that you can t go into negative equity. This should give you the comfort of knowing that your estate will not be liable for any outstanding debt. More on No Negative Equity Guarantee on page 8. Can I rent out my home? No. Your home should remain your main place of residence for as long as you continue with HomePlus. You may have a boarder, though, as long as at least one of the borrowers of the loan continues to live in the property. It s important to remember that living in your house is one of the terms of a HomePlus loan. Having said that, if you go overseas for a period of time you can rent your home out while you re away. But, please let us know if you intend to go away and not live in your home for a total of six months in any 12 month period

19 Notes Notes 36 37

20 Notes To make an appointment with one of our HomePlus Consultants Call Visit Go into your nearest ASB branch. All fees are subject to change. Copies of our Guide to Fees and our Home Loans & Personal Loans Guide to Fees are available from your nearest ASB branch or at asb.co.nz ASB s HomePlus loan criteria, terms and conditions and fees apply. Loans for business purposes are excluded and are for New Zealand residential property only. ASB s current Disclosure Statement is available free of charge from any ASB branch