Reverse mortgages, what are they and how do they work?

Written By Kim Manunui

So you’re near or retired, own your home, maybe an investment property, looking to release some funds for any amount of activities or projects.

Reverse Mortgages can allow you to draw down cash from the equity in your home with some key features that make them flexible -

  • No repayments to make. You can draw down funds and interest accrues on a floating rate that can be settled when the house is ultimately sold.

  • It can be used for any purpose, some key ones are helping children with deposits on homes, travel, renovations, vehicles or a cash top up.

  • It can be paid back in part or in full with interest charged on the outstanding balance only

  • In can be used in collaboration with family to look after you while also looking after inheritance assets

  • It can be used in conjunction with a Power of Attorney to manage spending

  • Limits are set on how much you can draw down to protect assets with the allowable percentage increasing with age ie: the age of the youngest applicant less 40 gives you the max percentage of the property value you can draw down

  • Appreciation in property values can help offset interest costs especially when funds are used for renovation works

On the cost side –

  • Set ups fees are around $1,000

  • Once up initial conveyances costs for registering a mortgage with a solicitor for first draw down are around $2,500, this can be added to the initial drawdown

  • Interest rates are floating, a couple of percent above mortgage rates, currently around 7.5% however cheaper than a lot of vehicle finance, personal loans and credit cards.

You will be encouraged to obtain independent legal advice with measures in place to avoid coercion and to protect your interests.

There are just two providers of Reverse Mortgages in NZ

Heartland is far and away the oldest and has higher limits.

At Infinance, we take a holistic approach to financial services and ensure you are entering into the right arrangements, if you want to enquire on the above simply get in touch with us and we can arrange contact with the right people to get you sorted.

To enquire on the above, click on the link below.

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Kim Manunui

Hi, I’m Kim and I work with a great team to help individuals, as well as small and not so small businesses get their message, product and services to the world using digital media and creating wonderful websites that don’t cost the earth.

I was born in Canada, and grew up around Vancouver and the mountains of British Columbia. My love of pristine environments led me to New Zealand and eventually to the mountains, lakes and rivers of the central North Island which is home. My family’s heritage is here, and it’s from here that Korio traverses the planet.

The digital world is never static and neither are we.

And I say ‘we’ because I work with an awesome group of talented people who I gather together as required to complete a project.  Whatever your business, not-for-profit or individual needs are we gather the best team to get the job done.

Collaboratively we are creative, share sustainable values and work hard for great outcomes because that’s the buzz of satisfaction that drives us.

If you have an audience and market to reach, we can make that happen. Creative design, words that work and smart behind the scenes stuff that cuts through the online noise. We’ll design your website and then build it. We’ll manage the content as well as all your hosting needs. We can handle your online advertising so you get noticed,
and we’ll manage your social media presence so you get the clicks, likes and engagement to grow your business. All within the budget you set, because none of this needs to cost the earth.  And the job doesn’t stop when your website goes live. We are your virtual business partner.

https://www.korio.co.nz
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