Heartland Bank has launched what it terms a "pilot" for an earlier foreshadowed reverse mortgage scheme to assist retirees moving into retirement living.
The bank's Village Access Loans, are "designed to offer older New Zealanders a solution to some of the barriers associated with moving into retirement living".
Heartland specialises in reverse mortgages.
The bank's chief executive Leanne Lazarus said Heartland aimed to be the leader in providing finance solutions that "address the unique banking needs of older New Zealanders".
"We are the market leader for reverse mortgages in New Zealand, and financing the needs of older Kiwi is a speciality of ours. Designed to remove the barriers to entry, Village Access Loans bridge the gap between moving from one stage of retirement to another."
Lazarus said to move into a retirement village people typically need to make an upfront lump sum payment - usually called an occupation license payment - to the retirement village operator or owner. Often people need to sell their existing home to fund that payment. This can present challenges – for example, house prices may be low at the time, or coordinating the sale and move is difficult.
"With this product, we saw an opportunity to reduce some of the stress older Kiwi face when having to sell their home to move into a retirement village. Often people are selling family homes they’ve been in for generations which is emotional and challenging enough without adding factors like market conditions.
"Village Access Loans give people an alternative way to fund the move by allowing them to borrow against the equity in their home and postpone the sale of their property to a more convenient time," Lazarus said.
The terms are that providing the property is worth at least $250,000, customers can borrow up to 50% of the value of the mortgaged home to finance the move to a retirement village. The loan is for a maximum term of three years and no regular repayments are required during this time. However, customers can choose to make repayments or repay early if they wish.
Heartland says the Village Access Loan’s variable interest rate is currently 9.59% per annum - but as it is 'variable' can be changed.
The note explaining the fees says that if customers don't meet the terms and conditions of the loan they could be charged a default interest rate of up to 2% p.a. above the current interest rate.
Heartland Bank's parent company Heartland Group Holdings recently reported a fall in half-year net profit to $3.6 million after taking a hit from a $49.6 million impairment that it revealed it was taking earlier.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.