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Monthly payment option on reverse mortgages

Growing demand for reverse mortgage loans has prompted Heartland Bank to offer its customers a monthly advance payment option.  

Thursday, May 11th 2017, 12:04PM

by Miriam Bell

Heartland Bank, which is New Zealand’s largest reverse mortgage provider, announced today that mortgage-free seniors can now opt to receive a minimum $300 monthly payment on their loan.

The option is intended to provide such customers with greater cash flow flexibility and financial freedom.

Heartland senior manager retail Lisa Hatfield said demand for their reverse mortgage product, which allows people to borrow against the equity in their properties, is growing rapidly.

In the year to June 2016, the bank’s reverse mortgage loan book increased by $28 million to $365 million, and it has grown strongly since.

One major reason for this is New Zealand’s growing population of seniors.

According to Ministry of Social Development data, around 75% of older New Zealanders own their homes mortgage-free.

This means many are likely to be asset rich, with their savings tied up in their property, but cash poor.

Stemming from this, reverse mortgage loans have been attracting recognition as a way for retirement-age people to fund better retirement lifestyles, Hatfield said.

“This new feature is ideal for borrowers looking to boost their income streams to maintain their lifestyles in retirement, without selling their property.

“People are using our loans to fund home repairs or improvements, travel, pay for medical procedures, or a host of other uses to make life easier and more comfortable.”

Heartland has also seen a growth in interest from people approaching retirement age and looking to refinance small amounts outstanding on a standard mortgage.

Hatfield said there are no regular repayments on their reverse mortgage loans, so using one to replace an existing mortgage can eliminate one demand on income after retirement.

Customers tend to use reverse mortgages as a practical financial planning tool, to appropriately balance their needs and their resources, she said.

However, the bank does require customers to seek independent legal advice before a loan is granted. Alternative options are also highlighted and customers are encouraged to talk to their family.

Hatfield added that the bank takes a conservative approach and lends only a relatively small proportion of a home’s overall value.

Reverse mortgages might not be suitable for everyone, but for the right person a reverse mortgage is the right loan product, she said.

Tags: Heartland Mortgage Rates

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.29 ▲2.69 ▲2.99
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.29 - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.89 3.19
The Co-operative Bank - Standard 4.40 2.99 3.39 3.69
TSB Bank 5.34 3.30 3.69 4.04
TSB Special 4.54 2.50 2.89 3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 29 July 2021 9:04am

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