Reverse Mortgages And Silver Foxes

SPEAKER_00 0:10

Now, in the past you would have heard us talk a lot about reverse mortgages and you probably would have wondered, what is it? It's not a game of Uno where we serve your reverse car. But this is a product that actually has been helpful. And to be honest, in the last eight years of being a mortgage advisor, I probably have only done one of those reverse mortgages because in the past it wasn't just something dominant that we did. However, with the arrival of James Buchanan into my team, he's decided that this is up his lane because he likes to hang out with senior seniors. I call them silver foxes.

SPEAKER_01 0:44

Silver foxes? I want to be a silver fox. That's my goal in life.

SPEAKER_00 0:48

Yeah. Hello, James.

SPEAKER_01 0:49

Buongiorno.

SPEAKER_00 0:50

Let's talk about silver foxes and how you've been helping them in the last few months. Because just this month you had four deals go through.

SPEAKER_01 0:58

Yeah.

SPEAKER_00 0:58

And I want to know more, and I want our listeners to know more about this fantastic product.

SPEAKER_02 1:03

Well, the interesting thing is that it's it does seem like it's it's something I've been working on for a long time. So it has taken a while to get those deals across the line. But it's so it's quite similar to mortgages in that way. Just because we're talking to a client today doesn't mean they have to do one, you know, this week or next week. But yes, so I'm doing about one a week at the moment, which is pretty cool. And there's a variety of different situations that that the senior citizens or seniors are finding themselves in. And the two main ones is the due to inflation, due to rates, due to house insurance, they want to stay in their own home, but the pension just doesn't

Cost Of Living Hits Retirees

SPEAKER_02 1:45

cut it anymore. They're going backwards on the pension, they can't do anything if they're reliant on that pension. Because if you think of people that are retirees today when they were our age, the pension was it was a much bigger thing than what it is now. We know that the pension is not really going to be there for us supporting us. No, but these people didn't know that. So they're in a situation where they've got a beautiful home, but they're relying on the pension.

SPEAKER_00 2:12

And the cost of living, right? Like the cost of living is really, really high right now. As you said, the utilities have gone up, the rates, the insurances. And as you say, a lot of people actually do want to remain at home. They don't want to go into aged care yet. And I know a lot of people that have been modifying their home to uh what was the word?

SPEAKER_02 2:33

Oh age, age and place. So age in place. So what so what some of the key things there are is just as you get older, you it's very hard to step into a into a sh into a shower tub, you know,

Ageing In Place Home Upgrades

SPEAKER_02 2:45

the or that's a bath. That there's a lot of New Zealand homes with a bath, there's a bath and there's a shower over the bath, and there's a big step. So a lot of people need to modify their bathroom so they can age in place. So that's that's one of the first things people want to do. And then secondly, it's just making it more low maintenance so that they don't find themselves having to maintain the property as much as what they had, and that might be doing outside stuff, you know, verandas and landscaping and all that kind of thing. So and quite often, like it's it's less than fifty thousand dollars that people are needing. It's it's not huge sums of money, and it's it can be as low as ten thousand. So it's just to mod often it's just to modify their home so they can stay age in place, it's the it's the house that they grew up that they brought their family up in, so they want to stay there, they have a really strong attachment to it. And and secondly, um, so that's would be sort of more like a lump sum, you know, if you need 30 or 40 grand just to maintain your house. And then secondly, the a very common one is a top-up of the pension where you can uh arrange a drawdown of five hundred or a thousand dollars per month as you need, as you need, just to help you get by and do the things that you want to do on a month-to-month basis.

SPEAKER_00 4:04

But do you think that's a good idea? Is that putting people into more debt? Well, I think it's how are they gonna pay it back?

SPEAKER_02 4:10

Okay, it's a great question. And that's this, you know, obviously, this is the the drawback or

How Reverse Mortgages Repay

SPEAKER_02 4:15

the con of reverse mortgages. Why I think that is a really good idea is because you're only drawing down what you need when you need it. So the the thing with a reverse mortgage is that you don't make repayments. You can make repayments whenever you want, and there's no break fees, which is awesome. But you repay the more you repay the reverse mortgage when uh you sell the house or when you pass away. Yeah. Or when you you and your partner pass away. So you own the house, the re the lender is in our case, the lender that we work with is never gonna own your house. You own your house, no matter what. But when you pass away and your partner passes away, or you sell the property, that's when you have to repay the loan. So the big drawback is if you get a reverse mortgage in your early 60s and you live till your 90s, you've got a loan

The Real Risks And Trade-Offs

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compounding over 30 years.

SPEAKER_00 5:14

Wow.

SPEAKER_02 5:15

So that for your estate anyway, is the beneficiaries of your state is is not ideal. It's also not ideal if you decide in your early 80s, if you get your reverse mortgage in your 60s, and then you decide in your early 80s that you want to go to retirement village or something like that because you might not have the equity that you need to get into a retirement village. But uh when we're talking to people about the reverse mortgage, it's it's not usually voluntary, it's usually because they need to do something and they don't have other options. But mind you, having said that, I have I do deal with I work with people who have still got their health in their early 70s and and they

Travel Medical Costs And Flexibility

SPEAKER_02 6:04

want to take advantage of their health and they're traveling overseas and doing cruises and stuff like that. So there's those as well, and you know, they're not they're wanting just to have their best lives. Um and why should they just sit in their home waiting to pass away?

SPEAKER_00 6:20

And I love that because a lot of them have worked really, really hard, like they would have worked really hard until they're 65, 70, they're finally retired, and then they go, Oh, this is the time, you know, when I want to do all those things before I get too old and tired. And then they've realized that yeah, they may not have the funds right now, and they might have other assets as well where the cash is probably trapped in, but they haven't, you know, bonds or supers elsewhere overseas, and getting a reverse mortgage can also be a short temporary solution for them. Yeah, I know some that borrowed money for medical reasons, like chip replacements, because they don't want to wait for public system as well. So, yeah, so there is a lot of different ways that you can utilize that money. But I guess the important thing is you say, you know, it's a it's a safe product. The lender is quite cautious, they usually wouldn't give the money out if they don't feel you're the right

Safeguards Legal Advice And Planning

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fit.

SPEAKER_02 7:14

It's a reputable, you know, it's a reputable lender, and they make you jump through a number of hoops to get the lending, and you've got to get lawyers. It's like it's like buying a retire go going into a retirement village. You've got to get legal advice on it. And as will I present the scenario to you, what your loan is gonna look like in 20 years' time, uh, there's a calculator, so it's very open what what that's gonna that that lending's gonna look like in 10, 15, 20 years' time. And we are telling people to be careful about what they draw down, you know, be sensible about it because you want to be able to, you know, you don't want to draw it all down and then you need it again, and your future self needs it. So you need to be making decisions based on you know what's best for you now, but also what's best for you in 10-15 years' time.

SPEAKER_00 8:06

Yeah, beautiful.

SPEAKER_02 8:07

There's also a key difference between people in their 70s and in their 80s and what they can and cannot do. And that is in some ways it's quite if people are waiting until their 80s, uh like if I look at my own parents and their and their friend group, just looking at the difference between my parents in their 70s and in the 80s, they were all able to do stuff, travel extensively in their 70s, in their 80s, it it's just not happening, they're not able to because of health reasons, and because your health really does start to decline at that age. So if you are looking to do things, it it's it's worth looking into, talking to us about it at least, you know.

SPEAKER_00 8:49

Exactly. Awesome, James. Well, thank you so much for those that do want to know more. Do reach out and it's obligation free chats and and we can point you in the right direction whether that's a good product

When To Ask For Help

SPEAKER_00 8:59

for you or not. Thank you so much. Absolutely. See ya. Bye.