Homeowners reaching retirement age often think about downsizing the family home to help fund retirement. For those facing this decision, it’s important to consider the emotional, physical and financial impact that moving out can have. For older Kiwis who may be feeling the pinch, there are alternative finance options available, such as a reverse mortgage, that allow you to release equity from your home, without the need to make regular repayments. Find out if a reverse mortgage is right for you.

Exciting or Emotional?

While moving home can be exciting, and downsizing the family home to buy something smaller can help free up some much-needed funds in retirement, the complexities of finding a new place to live can be an expensive, emotional and exhausting exercise, especially for older Kiwis who are familiar with their neighbourhood and community.

Once you add up the cost to buy, the valuation and survey costs, deposit, real estate and legal fees, then factor in the actual moving costs, which can be thousands depending on where you’re moving, the total amount can be significant.

On top of this is the logistical stress of moving out, including packing personal items, storing, selling or disposing of furniture, cleaning up, redirecting mail, reconnecting utilities, finding new healthcare providers, meeting new neighbours and joining new community centres and groups!

It’s helpful to know, there are alternative options for older Kiwis, who are feeling the pinch.

Retiring With Debt

According to a review by the Retirement Commission, there are an increasing number of over 60-year-olds with debt in retirement, and this is difficult to manage on NZ Super alone. With inflation and the cost of living continuing to rise, reverse mortgages are increasingly being used to supplement retirement income and/or consolidate debt.

A Heartland Reserve Mortgage is a specialised loan for Kiwis aged 60 and over, who own their own home. Different to a standard home loan, a reverse mortgage allows seniors to release equity from their home, without the need to make regular repayments.

Heartland Bank has helped more than 22,000 customers live a retirement they deserve, and understands that packing up a lifetime of memories and belongings, and saying goodbye to those living around you, can be difficult. For many retirees, aging in the home you love is far more enjoyable and greatly outweighs the benefit of moving out.

Using a Reverse Mortgage

A reverse mortgage can help retirees combat cost of living pressures, without having to give up their home. Most Heartland Bank customers use their reverse mortgage for essential home repairs or to consolidate outstanding debt or bills. But a reverse mortgage can also be used to fund home improvements, upgrade a car, for medical expenses, or to simply supplement income to support or improve standard of living.

The amount you can access depends on your age and the value of your home. Designed with the needs of retirees in mind, no repayments are required until the customer moves out, with the flexibility to make repayments at any time without penalty, if preferred.

Most importantly, retirees can continue to own their own home and live in it for as long as they choose, without having to deal with the physical, mental and financial stress of moving out.

Reverse mortgages are on the rise as acceptance and awareness grows. In fact, as the leading reverse mortgage provider in New Zealand, Heartland Bank experienced 24% annualised growth in their Reverse Mortgage product in the six-month period between July and December 2022.

Explore Financing Options

For homeowners aged 60 and over, it’s worth exploring the option of a reverse mortgage to help fund a more comfortable and enjoyable retirement. However, it’s important to note that reverse mortgages are not for everyone. Certain considerations must be kept in mind before choosing a reverse mortgage.

For example, reverse mortgages may be more expensive compared to other types of loans and, in some situations, borrowers may be at risk of foreclosure or losing their home. Seeking expert advice is strongly recommended before making decisions relating to taking up a reverse mortgage.

Talk a Mortgage Express branded mortgage adviser to see if a reverse mortgage is right for you, or find out more information by visiting Heartland Bank Reverse Mortgage.

* Applications are subject to loan approval criteria. Heartland Bank Limited’s responsible lending criteria, fees and charges apply.