Living comfortably in your later years is the goal - Equity Release is the method.
Cameron (that economist guy you’ve probably seen on television and commenting in the media) founded Equity Release with a mission to offer insightful, unbiased insights to homeowners considering Equity Release solutions with a particular emphasis on statistics and some realities to enable people to make informed choices. Cameron is renowned as a straight shooter and putting economic realities into words people can understand. Click here to chat.
The economic theory behind Equity Release products is well founded - you save during the working years and run down the savings (or equity) to maintain consumption (spending) when your income drops as you retire.
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Like most things in life, there is no free lunch. A reverse equity mortgage means you pay interest, and interest compounds. Home reversion products mean you are no longer a 100% owner of your property, and you surrender some capital growth in return for releasing equity. There are fees involved.
Beyond the nitty gritty of Equity Release products, the pros and cons, Cameron points to two critical areas to consider.
The first is the reality for many of being asset rich and cash poor. Releasing equity, whether that be via a reverse equity mortgage or home reversion, offers a solution.
Rates, electricity, gas, health insurance and home maintenance to protect the value of an asset all cost money and are rising faster than general inflation or NZ Superannuation. Equity Release gives the ability to respond to both pressing financial needs or an unexpected financial issue and enjoy a more financially friendly and enjoyable retirement.
The second is the impact of rising house prices. Historically house prices have doubled every decade. Cameron is not expecting that to continue. However, even modest house price growth can mean your net wealth will likely continue to rise even if you are drawing down debt or equity in the home. Equity Release NZ can take you through some examples.
Equity Release NZ can also provide data showing historical house price growth for your area compared to the national average, so you can make a more informed judgement on the potential for the accumulation of wealth (via house prices) relative to releasing it via Equity Release mechanisms. Some regions will benefit more than others from stronger projected population growth.
