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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.

Wednesday, February 19th 2020, 10:04AM 2 Comments

by Dan Dunkley

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.”

 

Tags: banks Heartland interest rates investment Mortgage Advisers mortgages property investment reverse mortgages

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Comments from our readers

On 20 February 2020 at 8:03 am 747 said:
MR Andrew Ford does not highlight the restrictive Heartland rule of their "secret" Location-Location-Location of any property one wishes to use for equity release in your old age.! So for 90% retirees it is a no go scenario....
On 20 February 2020 at 11:58 am 747 said:
Heartland has a serious case of "Location Discrimination..." If your mortgage free property is in the wrong place you can say goodbye to any help from Heartland...

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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