Equity release is a financial arrangement where homeowners, typically seniors, can access the value tied up in their property. It involves either selling a portion of the property or taking out a loan against its value, with repayment typically deferred until the homeowner moves out or passes away.

Historically seniors in New Zealand have had access to the reverse mortgage model (known globally as a Lifetime Mortgage), which involves taking a loan against the value of your home. The alternative model, which is selling a portion of your home, is the debt-free model. While it’s new to New Zealand, it’s well understood globally, often referred to as Home Reversion.

Ownership Portion: With debt-free equity release, Lifetime Home typically buys a portion of your home, in most cases this will be around 35%. This means you still maintain ownership of your home, but the company has a stake in its value.

Regular Income: In return for selling a portion of your home’s equity, Lifetime Home provides you with a regular income stream. This income can be paid fortnightly or monthly.

Non-Debt Financing: Unlike traditional loans or mortgages, debt-free equity release does not add to your debt burden. The income you receive is based on the equity you sell, not borrowed funds. It allows you to access the wealth tied up in your home while you continue to live in it.

Flexible Options: Debt-free equity release can offer flexibility. You might choose to take one year’s worth of income payments as a one-off lump sum to meet an expected expense. At the end of the Agreement, typically after 10 years, you remain in your home but your income payments will cease. However, you could request to release further equity in exchange for a continued income stream. Any further equity released would not exceed 50% of your home’s value.

Overall, debt-free equity release provides retired homeowners with a means to unlock the value in their property to support their retirement lifestyle, without taking on additional debt.

However, it's crucial to carefully consider the terms and implications of all equity release products before making any decisions, as it may impact your inheritance and future financial plans. Consulting with financial advisors or specialists in this field can help you navigate this option effectively.