Understanding equity release

The continuing popularity of equity release products – including reverse mortgages and home reversion schemes – has prompted ASIC to release new information to help consumers understand the products and any risks that may be involved. ASIC’s Equity Release Fact Sheets are being launched following action against reverse mortgage provider, Transcomm Credit Co-operative Ltd. ASIC was concerned that the promotion around Transcomm’s ‘award-winning’ Annuity Plus Reverse Mortgage product was misleading. ‘Equity release products are highly complex both in the way they are designed and in how they will impact on consumers’ overall financial positions as they age’, Greg Tanzer, executive director of consumer protection said. ‘While these products can provide a valuable source of cash for retirees, overseas and local experience shows that consumers can be exposed to significant risks if they use the products inappropriately.’ ASIC’s Equity Release Fact Sheets are available from the FIDO website at www.fido.gov.au/equityrelease.