Unlocking your housing equity

by | January 8, 2019

AN has an option that will help supplement your retirement savings.
Jonathan Teoh, founder of AN has a unique idea to unlock one’s housing equity for seniors who might need money for their health conditions and may not be covered by insurance, or for childless couples who need money to travel. “Most people are asset-rich but cash-poor. A huge bulk of people’s funds are locked up in housing equity, followed by CPF. Cash savings is what puts food on the table and pays for current and future expenses, including retirement needs,” he explained.

If you want to access your housing asset, there are a few options. You can sublet – currently, 17 percent of households enjoy this form of rental income according to 2017 data, shared Jonathan. You can also downsize – he said that 79 percent have lived in their present homes for over 10 years and don’t want to move.

“Lease buyback has not seen significant take-up and this is due to strict age criteria and longevity risk. Reverse mortgages have discontinued; today only 38 private property and 10 HDB reverse mortgages are still being serviced by NTUC Income,” he shared. So, why are these not popular? He explained, “You can’t bequeath to loved ones, there is no capital appreciation as you are removed from the property market, and if you have outlived your terms of mortgage, you may find yourself homeless in your advanced years. All these are bad deals for seniors.”

He added that with HDBs, there are many options to turn your housing asset into income, however, with private properties – condos and landed – it remains an underserved market and with no solutions. Jonathan hopes his idea can give seniors the much-needed monies.

Basically, with his idea, a senior can sell half of his home at market value to AN, while he retains the other half. “This means he enjoys capital upside from his share as it appreciates and he can then pass it on to his loved ones when he passes. He also gets to live in his own home and gets guaranteed payouts for life,” said Jonathan, who has eight years in property marketing and has a panel of advisors in AN from property, asset management, research and regulatory committees.

He explained that the 50 percent that is sold to AN is housing equity and is pooled together into a fund that will be managed by a renowned asset manager and marketed to institutional investors who want good returns from safe investments. These investors will pay for the transactional cost including the stamp duty of 28 percent. “Some of the capital that is raised here can be invested for cash returns on an annual basis for the senior so that about 2.5 percent goes back to the senior. That means he gets around three times of cash in hand for life monthly and that includes his already existing amount to supplement his retirement savings.” Last year, he was one of three top teams selected from Modern Aging Singapore’s comprehensive business development programme by ACCESS Health International and NUS Enterprise, the entrepreneurial arm of the National University of Singapore (NUS), and was awarded S$25,000 in seed funding.

“This model has not been implemented anywhere in the world,” said Jonathan. Though his idea has yet to be rolled out; he is planning to do so at the end of 2019 and has high hopes as he is also eyeing beyond Singapore, including in Australia, UK and the US and allow more seniors a chance to supplement their retirement savings.


** AN is conducting a survey to better understand the concerns of seniors regarding financial stability in retirement. To participate in this survey, please click on the following link: www.surveymonkey.com/r/anliving-PG.




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