Latest / That Home Loan Hub / A Practical Guide To Using Home Equity To Top Up Retirement Income In New Zealand

Transcript

A Practical Guide To Using Home Equity To Top Up Retirement Income In New Zealand · That Home Loan Hub

• 0:10
  SPEAKER_01: We are back talking about reverse mortgages.
• 0:13
  SPEAKER_01: So if this was a topic of interest for you before, listen up.
• 0:17
  SPEAKER_01: We've got more information for you today.
• 0:20
  SPEAKER_01: I've got our reverse mortgage specialist in the house.
• 0:22
  SPEAKER_01: Hello, James.
• 0:23
  SPEAKER_00: Aloha.
• 0:25
  SPEAKER_01: And he drops a pan.
• 0:28
  SPEAKER_01: All right, James, you have been busy.
• 0:31
  SPEAKER_00: Oh my God.
• 0:32
  SPEAKER_00: So this year, I mean, I had an amazing year last year getting into this role.
• 0:37
  SPEAKER_00: And then as the year rolled on, I just started, I've been spending a lot of time around older people and what their needs are and all that kind of stuff.
• 0:44
  SPEAKER_00: And just the things that I've been learning.
• 0:46
  SPEAKER_00: And every week there's something new.
• 0:49
  SPEAKER_00: And last week, last week just blew me away because out of the woodwork came all a completely different target market for reverse mortgages that I just would not have thought of.
• 1:00
  SPEAKER_01: Wow.
• 1:01
  SPEAKER_01: Who is that?
• 1:02
  SPEAKER_01: I'm intrigued now.
• 1:02
  SPEAKER_01: Who is that?
• 1:03
  SPEAKER_00: We in New Zealand we have a huge percentage of sole traders, people who work for themselves in a trade or in construction, stuff like that.
• 1:13
  SPEAKER_00: And so they've worked for themselves most of their lives, and now they're getting to sort of close to that age of 60 or 65, and they're starting to think about, you know, you know, because they're in they're in physical draining job jobs.
• 1:28
  SPEAKER_00: They're quite so the top types of jobs that those tradespeople are doing and the builders are doing, it's it's not something that you can easily do in your older years.
• 1:38
  SPEAKER_00: No.
• 1:39
  SPEAKER_00: So we're getting we're getting beginning to get a lot of inquiries from people because when they sell their businesses, unfortunately, they're the business.
• 1:49
  SPEAKER_00: So their businesses is not necessarily gonna when they sell those businesses, high value, yeah, it's not necessarily gonna provide them for retirement.
• 1:58
  SPEAKER_00: But they've often made quite a lot of money throughout their working lives, but because they're sole traders, they haven't really put it aside in Kiwi Saver or s or anything like that.
• 2:08
  SPEAKER_00: So you're getting people needing to retire, say a bit earlier than the 65 age because of physical demands, but they don't have necessarily the money to do so.
• 2:23
  SPEAKER_00: So this uh really surprised me.
• 2:27
  SPEAKER_00: But it makes a lot of sense once you start thinking about how so let me get this right.
• 2:32
  SPEAKER_01: They've worked hard all their life, they were self-employed, they missed out on the benefit of having a KiwiSaver.
• 2:40
  SPEAKER_01: Now they've retired, they sold a business or shut it down, they may not have sold it from Hutch, and they suddenly realized they don't have that golden nest egg at the end of their retirement.
• 2:51
  SPEAKER_00: Yeah.
• 2:52
  SPEAKER_00: And the ones I'm talking to aren't at haven't retired yet, they're thinking about it.
• 2:57
  SPEAKER_00: Yeah, they're beginning to think, oh God.
• 2:59
  SPEAKER_01: So thank God they found you.
• 3:01
  SPEAKER_00: Yeah, well hopefully, yeah.
• 3:03
  SPEAKER_00: But they just get they're almost at that point, and now they're starting to see, oh, what am I gonna do?
• 3:08
  SPEAKER_00: I mean, because they're you know, they're in their 60s, right?
• 3:11
  SPEAKER_00: They've still got 20 plus years, 20, 20, 30 years ahead of them potentially.
• 3:16
  SPEAKER_00: And they they can't necessarily carry on with what they're doing right now for too many more years.
• 3:22
  SPEAKER_00: So this is when a reverse mortgage could be beneficial for those types of clients.
• 3:29
  SPEAKER_00: And the main way I the my in in the main way it could be is that it it could be used as a top-up of the pension.
• 3:38
  SPEAKER_00: So you get I think you get four or five hundred dollars per fortnight on the pension, something like that.
• 3:44
  SPEAKER_00: Well, the way a reverse mortgage can can work is you can get a you can draw, as long as you're own your home free free hold or nearly free hold, it doesn't have to be completely freehold.
• 3:56
  SPEAKER_00: You can get it, you can draw down the equity in your house to support your retirement.
• 4:02
  SPEAKER_00: Now, you don't have to do that in a big lump sum.
• 4:04
  SPEAKER_00: You don't have to draw down a hundred thousand dollars right at the beginning.
• 4:10
  SPEAKER_00: But what you can do is draw down, say, a thousand dollars a week or I'm sorry, a thousand dollars a week, a thousand dollars a month to top up your pension.
• 4:20
  SPEAKER_00: And that that way you're not incurring huge interest costs right from the beginning.
• 4:26
  SPEAKER_00: Whereas if you were to draw down a couple of hundred grand in your early sixties, that's gonna that's gonna compound compound away in in in into your eighties when you go to sell the house.
• 4:38
  SPEAKER_00: It's gonna be a big loan once they add all the interest on it.
• 4:42
  SPEAKER_00: But if you're in a situation where you just need your we just need your pension tip topped up for, you know, you it might not be for long, it might just be for a few years, that can help you just have the lifestyle that you want to have, or just do those things that outside the basics.
• 5:02
  SPEAKER_01: Because we also talked about, right, how you retired 65, usually, and then about until 75, you've still got those golden years to be traveling, to do all the fun stuff, you're still in a good, healthy, relatively healthy mode.
• 5:18
  SPEAKER_01: And you said you've noticed that, that all your parents' friends that 10 years ago they were much more physically able to do things.
• 5:28
  SPEAKER_01: And now that you met them at your mom's funeral, you were blown away how much they changed.
• 5:33
  SPEAKER_00: Difference between 70 years old and early 80s, just I'd almost didn't recognize people.
• 5:40
  SPEAKER_00: It was such a difference because I hadn't seen them at all during that time, and in the early 70s, they're all going on river cruises and all the you know, massive train trips all over the world and doing all those kinds of activities.
• 5:54
  SPEAKER_00: That's just you know, now they're losing their licenses because they you know they can't drive anymore, so their whole independence is is pretty much been eroded away.
• 6:05
  SPEAKER_00: And so sometimes some of these people want options to like my parents were able to they were able to afford to have care come into her their house so they didn't have to go into a hospital or anything like that.
• 6:16
  SPEAKER_00: So yeah, it there's a there's a bit of a spin-off.
• 6:21
  SPEAKER_00: I mean, you've got to weigh it all up.
• 6:24
  SPEAKER_00: I would be suggesting if people are looking at a reverse mortgage in the early 60s to help top up the to top up the pension that you that you're really disciplined about how you do that.
• 6:34
  SPEAKER_00: So that's something that you can maintain for a you know a reasonable amount of time.
• 6:39
  SPEAKER_01: Exactly.
• 6:40
  SPEAKER_01: But we do have a seminar coming out on 19th of March, two o'clock in Namanu Waikonai.
• 6:46
  SPEAKER_00: Yeah.
• 6:47
  SPEAKER_01: So for those that are local and interested, come in, you know, come register, it's free.
• 6:53
  SPEAKER_01: You will learn more about this product because we will have a reverse mortgage specialist there.
• 6:59
  SPEAKER_00: Yeah, absolutely.
• 7:00
  SPEAKER_00: And he's really, really good.
• 7:01
  SPEAKER_00: And he can he'll be able to answer all your questions.
• 7:04
  SPEAKER_00: And if you want to register, just look up me online, James.buchan at my perro.co on the spot who I work for there.
• 7:13
  SPEAKER_01: Zibonisa, you work for Zibonisa.
• 7:15
  SPEAKER_00: That's all right.
• 7:16
  SPEAKER_00: But yeah, we're more than happy to get any queries.
• 7:18
  SPEAKER_01: So beautiful.
• 7:19
  SPEAKER_01: Awesome, James.
• 7:20
  SPEAKER_01: Thank you so much.
• 7:21
  SPEAKER_01: I think you really highlighted a real issue in New Zealand.
• 7:25
  SPEAKER_01: And I will just add in from my point of view that women are even worse off.
• 7:29
  SPEAKER_01: Yeah.
• 7:29
  SPEAKER_01: You know, we've got men that are feeling the pinch, but then women are feeling it even more because of the pay gap, because they usually took the time off work to stay home and look after the babies, and then by the time they return to workforce, you know, they're not earning the same amount as their counterparts.
• 7:48
  SPEAKER_01: So what we're finding is by the time the women retire, they are suffering a lot financially.
• 7:54
  SPEAKER_01: So, how do we change the narrative?
• 7:56
  SPEAKER_00: And so yeah, I'm actually dealing with a reverse mortgage client who is older and her husband's passed away.
• 8:01
  SPEAKER_00: Absolutely, yeah.
• 8:02
  SPEAKER_00: And now she's like, she wasn't involved in any of this kind of stuff.
• 8:06
  SPEAKER_00: So it's uh it's a really big thing, it's a really big hurdle to um in this case she's okay financially, but she had she doesn't have the background sort of expertise because her husband did everything.
• 8:20
  SPEAKER_00: So absolutely.
• 8:22
  SPEAKER_00: I just encourage women to get involved in whatever.
• 8:25
  SPEAKER_00: As early as possible.
• 8:26
  SPEAKER_00: Exactly.
• 8:27
  SPEAKER_01: Yeah, beautiful.
• 8:28
  SPEAKER_01: Thank you, James.
• 8:28
  SPEAKER_01: Take care.
• 8:29
  SPEAKER_00: See ya.