The dream of owning your own home is very much part of the kiwi identity, and as it was previously an achievable goal, it’s no surprise that a vast number of New Zealanders over 60 own their own home. For many of these people, the family home is their main asset, and the majority of their wealth is tied up in the home, while they utilise Government Superannuation as the primary source of income. With the rising cost of living, this can lead to financial worries when unexpected expenses arise.
An option available in this situation is to take out a reverse mortgage. A reverse mortgage uses the equity in your home as security for a loan which can be spent as you wish, be it house repairs, health care, as a bank account top up to assist with daily living expenses, or even a holiday. The reverse mortgage and any accrued interest and fees are repaid to the lender when you sell your home.
It is important to understand that there are substantial costs to be aware of when considering a reverse mortgage, including:
- higher than usual interest rates
- valuation costs
- fees, including – establishment, draw down, repayment and break fees
When determining whether a reverse mortgage is right for your situation, we strongly recommend you discuss your options with your family first.
The friendly and experienced Seniors Team at Harmans are available to provide independent legal advice and guide you through the reverse mortgage process.
