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Martin Hawes views on Home Equity Release (Reverse Annuity Mortgages)

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Martin’s paraphrase of  his ‘Sunday Star Times’ article, 26th April 2015, whose copyrights we acknowledge.

Last week we learned that the Reserve Bank has concerns about “reverse annuity mortgages”. These are financial products that older people buy which allow them to re-mortgage the house for cash on which to live. Banks (mostly Heartland and ASB) will lend retired people money for lifestyle purposes. Interest accrues but does not have to be paid in cash; it is added to the capital sum and the whole lot is repaid when the retiree (or her estate) sells the house.
In my view these are great products as they allow people with a valuable house to travel or replace the car. Those who are asset rich but cash poor can stay in their houses and draw on their capital. For some people, the ability to borrow cash in this way will be an excellent choice even though the accruing interest will reduce wealth. Continue reading Martin Hawes views on Home Equity Release (Reverse Annuity Mortgages) →