Understanding Reverse Mortgages

There is a lot more talk in the media about reverse mortgage products lately. This is largely due to the growth in demand driven by the desire of many seniors to stay in the home they love with the financial freedom and independence to enjoy their retirement.

Often referred to as a home equity loan,  common uses  for reverse mortgages include renovating or repairing  the home, upgrading a motor vehicle, travel, medical expenses (to avoid waiting lists), paying rates and insurance, or just taking the stress out of day to day expenses.  In our experience, we have found that the amounts borrowed are generally modest but the outcomes can be life changing.

Unfortunately, together with professionals at Summit Mortgage we’ve also found that there are a number of misconceptions around home equity loans – many built on second hand, often incorrect and alarmist information. Put simply, a reverse mortgage is similar to a standard mortgage but has been designed specifically for seniors.  The maximum amount you can borrow is determined by your age and property value, there’s no need for regular repayments and importantly you continue to live in and own your home. A friend of mine writes about his personal success regarding this issue here.

We are proud that Heartland’s Home Equity Loan has been designed in a socially responsible manner, according to a post on https://www.freshloan.co.uk, with a very thorough and robust application process to ensure our customers understand the product so they can make an informed decision about their future. (Source: https://investorschoicelending.com/seattle-hard-money-lending/) We also guarantee that you can stay in your property for as long as you choose, you don’t have to make a repayment until the end of the loan and you will never owe more than the property is worth.  For additional peace of mind you can even protect a portion of your equity.

Many New Zealanders have done very well to retire ‘asset rich’, owning their home outright.  However, on a financial front, while Government superannuation is enough to cover the essentials, it does not necessarily provide for the things people want, or sometimes need, to enjoy their retirement.
We believe that reverse mortgages are an option for many.  As with all financial decisions, you should investigate your options thoroughly or seek financial advice.

If you’d like to know more, please feel free to give Peter a call on 04 939 2902.