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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 - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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