When you’re older and own your home outright, a reverse mortgage, a loan that lets homeowners age 55+ access cash from their home’s value without moving out. Also known as a lifetime mortgage, it’s designed for retirees who need extra income but don’t want to sell their house. Unlike a regular mortgage, you don’t make monthly payments. Instead, the lender pays you—either as a lump sum, regular cash flow, or a line of credit—and the loan, plus interest, gets paid back when you move out, sell, or pass away.
This isn’t just about getting cash. It’s about equity release, the process of unlocking money tied up in your home—something many UK retirees use to cover bills, home repairs, or medical costs. But it comes with trade-offs. The interest compounds over time, often faster than you expect. Your home’s value may grow, but your share of it shrinks. And if you later need state benefits like Pension Credit, the cash you get could reduce or cancel them. Some people also worry about leaving less for their kids—because the loan balance grows, there may be little or nothing left in the estate.
It’s not the same as selling your home and downsizing. With home equity, the portion of your home you truly own, free of debt, you keep living where you are. But you’re still borrowing against it. The amount you can release depends on your age, your home’s value, and sometimes your health. The older you are, the more you can typically get. Some lenders even offer better deals if you have certain medical conditions. But hidden fees—arrangement fees, legal costs, valuation charges—can add up. And if you change your mind later, getting out can be expensive.
People use reverse mortgages for all kinds of reasons: to pay off an existing mortgage, help a grandchild with a deposit, fund a long-awaited trip, or just make life a little easier on a fixed income. But it’s not a quick fix. It’s a long-term financial decision with lasting effects. That’s why so many of the posts here focus on the real costs, the hidden risks, and the alternatives—like equity release schemes, downsizing, or even renting out a room. You’ll find clear breakdowns of what you actually pay, how much you can borrow, and what happens to your family’s inheritance. No fluff. No sales pitches. Just what you need to know before signing anything.
Equity release isn't your only option. Discover five smarter ways to boost retirement income without debt - downsizing, KiwiSaver, part-time work, government support, and more - with real examples from New Zealand.
