You may notice we have a new name! Don’t worry – nothing else has changed. See more info here.

CASE STUDY: Buying our dream home with a Heartland Reverse Mortgage

16 March 2022

Melbourne couple James and Mary* have always dreamed of retiring in coastal New South Wales, living in their own home close to the beach, and being financially independent.

However, when it came time to make the move in 2016, their Melbourne property didn’t sell for as much as they thought, and they underestimated the costs involved with moving interstate. This meant they would have to spend most of their existing resources, including their super, to live in their dream location.

This left them with a dilemma:

  • Buy their dream property in the perfect location, but then have only the pension, getting by on a limited income.
  • Or live in a smaller property – without the amenities and lifestyle they were hoping for.

James had researched reverse mortgages prior to their decision to sell and move. So, he dug out the materials and got in touch with Heartland to see if we could help. After speaking to our team, he was confident that Heartland could provide the financial means and support for them to extend their property purchase price, should it be required, so that they could live their dream retirement and have enough resources to fund future needs.

When James and Mary found their dream home, it was about $100k over their budget, so they decided to go ahead with a Heartland Reverse Mortgage to cover the extra cost, top up their income, and keep funds aside in a cash reserve facility for future needs.

Now, 5 years later, James and Mary’s property has almost doubled in value. In addition, it is far more valuable and appreciated faster when comparing it to the lower priced properties they were considering at the time.

James said, “Without Heartland we would have purchased a lower priced property. Yes, we wouldn’t have any ‘loans’ with the lower priced option but we would have much less equity wealth and wouldn’t have had the pleasure of living in our nicer home for the past 5 years. By now, with the lower priced options, we would [sic] eaten away much of our super and savings.

We now find ourselves with increased equity, living in a lovely home of our choice and having the confidence that our Heartland Reverse Mortgage will continue to support our lifestyle…. Without Heartland none of this would have been possible.”

Since their initial drawdown, every so often they apply for extra funds from their cash reserve facility to cover any expenses that come up. They also know they may be able to apply for a further advance should they require it, due to their increased property value, if it fits the credit criteria in the future when they apply.

James and Mary:

  • Bought a property worth $545,000
  • Initially drew down from their Heartland loan $20,000
  • Drew over time a further $40,100
  • Still have available to draw in future $38,000

The loan currently outstanding is $75,782.01 (plus they have $38,000 still available to request) and their property value is estimated to have increased to over $1,000,000, meaning they have at least $924,217.99 of equity currently remaining – which is an increase of $379,217.99 in net equity from when they purchased their beautiful home.

Not only do they have more net home equity, but they are living their dream retirement in their own home, 5 minutes from the beach in Coastal New South Wales, with peace of mind and reduced financial stress. James noted that even if the property price boom didn’t happen, they would still be happy with their decision and more comfortable.

James has the following advice for anyone considering taking out a reverse mortgage.

“Consider your lifestyle, and your home equity. It’s all good and well having a million-dollar home, but not when you are living off the pension where you can only just get by. Your home equity is yours to spend, you can control where you want to live – I would recommend a reverse mortgage to anyone who wants to live a live a better retirement.”

 

*Names have been changed to protect the privacy of our customers.

Please note that Heartland encourages our customers only to borrow what they need, and applications are not guaranteed – they are subject to credit criteria, a suitability assessment and acceptable valuation. Independent legal advice will be required and Applicants should consider their own circumstances and we recommend professional financial advice. There is no assurance that property values will increase over time, and property values may also decline, and this case is a real reverse mortgage customer, and performance is not guaranteed.  You can also repay your loan, in part or in full, at any time.

The information provided is accurate as of 16 May 2022 and may change from time to time.