So what is a Reverse Mortgage? It is a new type of mortgage here in New Zealand. It is sometimes known as an Equity release loan. It allows borrowers to take out the equity in their own house to help maintain their standard of living during their retirement years. The loan may include monies released for emergencies such as medial expenses, money for holidays or for renovating your existing home.
The beauty of this reverse mortgage is that there are no monthly repayments to be made. The lender simply recoups their monies by selling off the mortgaged property / asset either when the borrower passes away or at the direction of the borrower. The lender also only takes the monies owed to them, the remainder is left in the estate of the borrower.
If you think this is a good idea and may suit your needs, make sure to consult your accountant, solicitor and financial planner before you jump in. It is important to know all the ins and outs of this type of loan.
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