It follows the expansion of its reverse mortgage business
Heartland happily announced last month that it expanded its reverse mortgage businesses following the product’s popularity in the country. However, it has advised customers to take it easy before quickly grabbing the opportunity.
As New Zealand faces low-interest rates and high house prices, many Kiwis have been taking out reverse mortgages against their homes – with Heartland seeing a massive jump in inquiries since interest rates fell.
Andrew Ford, head of retail at Heartland, commented that people usually see downsizing as the only way to access finance tied up in a house. He noted that reverse mortgages could be another option, but advised Kiwis only to borrow what they need and to determine if they could opt for better alternatives such as money in the bank.
“A reverse mortgage can be a fantastic option to help retirees live the retirement they desire and deserve. More retirees are considering it – whether they want to improve their home, travel, consolidate some pesky debt, or take the stress out of everyday bills,” Ford told Stuff.co.nz. “Reverse mortgages are not for everyone, but for some people, they can make a transformational difference.”
Read more: Heartland expands reverse mortgage business
Tom Hartmann, editor of Sorted, commented that it’s wise to ask for independent financial advice aside from the legal advice required for a reverse mortgage.
“You do run into the richest poor people out there who are asset-rich but cash-poor,” he told Stuff.co.nz – adding that he understands why people find the product appealing when house prices skyrocket.
“That ends up making reverse mortgages look much better than they are. In general, you end up losing a substantial portion of your house's equity,” he said. “They're counting on a lot of that coming from future increases. People must run their numbers and understand what they're getting themselves into.”
