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Heartland launches reverse mortgages for investors

Heartland has expanded its reverse mortgage business and will now lend against investment properties and second homes, as the product becomes more popular in New Zealand.

Tuesday, February 18th 2020, 5:23PM 2 Comments

The lender has launched its new product, the Second Property Loan, off the back of strong growth.

Heartland will provide reverse mortgages to over 60s on second homes, investment properties and holiday homes.

The product is aimed at people who may not want to release equity from their main residence. 

The money can be used for home improvements, debt consolidation, travel or bills, and the firm is offering the same guarantees as its main reverse mortgage lending products.

The new product line comes amid significant growth for Heartland, as reverse mortgages become more popular on both sides of the Tasman.

Heartland Bank announced its half-year results this week, and recorded a 10% increase in its New Zealand reverse mortgage book as consumers become more aware of equity release products.

Heartland posted its results for the six months to December, with group net profit of $39.9 million after tax, an increase of 20.4% on the comparable period the year before.

Receivables grew by 8% year on year to $4.46 billion, and the finance group and bank recorded a return on equity of 11.7% for the year.

A growth in reverse mortgages here and in Australia was a key reason for the profit boost and revenue increase, the company said.

New Zealand reverse mortgages receivables grew $26 million, 10% growth year on year. NZ reverse mortgage net operating income rose to $13 million, up $2.7 million.

Andrew Ford, head of retail, told TMM Online the reverse mortgage growth was mainly down to increased awareness in NZ.

He said customers ranged from 60-90 years of age, and tended to use the cash to renovate homes, make retirement more comfortable, and provide extra income for expenses.

Ford said low interest rates have put downward pressure on retirees’ term deposit income, leading some customers to seek additional funds.

“They are having to eat into savings or tighten their belt. Reverse mortgages are a way to maintain the lifestyle they desire and deserve. It can be transformational.”

Mortgage advisers only represent about 10% of Heartland’s reverse mortgage business, Ford said. He believes advisers have the chance to broaden their business and encourage clients to talk about the products with their families.

“We have dedicated resources to get out there and talk to advisers,” Ford said. “There’s a great opportunity for advisers to talk to potential customers, as well as the children of potential customers, who may not be aware of these solutions, as banks tighten their lending criteria.”

Tags: Heartland reverse mortgages

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Comments from our readers

On 20 February 2020 at 7:53 am 747 said:
Heartland does NOT point out that LOCATION of the property, second home or investment property is assessed by their restrictive criteria....their way or the highway. So their claims of some great fair equity release product is a no go for 90% of any one hopeful of releasing some equity in their property for the last few years of their lives in NEW ZEALAND.
On 20 February 2020 at 8:27 pm Andrew Ford said:
This is incorrect 747. A reverse mortgage, like all lending products, is subject to credit criteria, however by population Heartland is able to assist over 90% of New Zealanders. We are unashamedly conservative with our criteria. This is not only to protect Heartland, but also assist preserve the equity our customers have in their homes. We are happy to assess any scenario on a case by case basis, however we are proud of our product, having researched extensively overseas. Happy to discuss anytime.

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.55 3.85 4.49
ANZ Special - 3.05 3.35 3.99
ASB Bank 4.45 3.55 3.89 3.99
ASB Bank Special - 3.05 3.39 3.69
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 3.09 3.35 3.69
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.75 4.10 4.55
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.15 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 ▼2.95 ▼3.09 ▼3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.94 4.08 4.39
Kiwibank 4.40 3.84 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 3.09 3.39 3.65
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 ▼4.09 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - ▼3.09 ▼3.39 ▼3.69
The Co-operative Bank - Owner Occ 4.40 3.25 3.45 3.69
The Co-operative Bank - Standard 4.40 3.75 3.85 4.19
Lender Flt 1yr 2yr 3yr
TSB Bank 5.34 ▼3.89 ▼4.15 ▼4.49
TSB Special 4.54 ▼3.09 ▼3.35 ▼3.69
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 3.09 3.39 3.69
Median 4.60 3.65 3.89 3.99

Last updated: 31 March 2020 8:55am

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