New Zealand’s first debt-free home equity release income solution for retirees aged 70 and above is here.

With Lifetime Home, there’s no mortgage, no debt, no interest, just regular retirement income to help supplement day-to-day living in retirement.

Kiwis have not had access to a debt-free equity release product. Until now.

Lifetime’s founder and managing director Ralph Stewart explains: “Lifetime Home is a new retirement income option for retired Kiwi homeowners to tap into what, for many, is their biggest asset – their home – to bolster their income in retirement.

“Around two thirds of New Zealanders aged over 65 are fortunate enough to own their home outright, which provides a great sense of security as they age.

“But many of this cohort have little to no other savings, meaning NZ Superannuation (NZ Super) is their only income. NZ Super is a wonderful benefit, but we know it’s not enough for most retirees to live on, let alone fund a comfortable, dignified retirement.

“Home equity release products can provide a life-changing opportunity for our asset-rich Kiwi retirees to really make the most of their post-work years by deriving an income based on the value of their house, while retaining the security of a home for life,” he says.

‘Home equity release’ refers to any financial arrangement that allows homeowners to access some of the wealth tied up in their home without having to sell up. It’s not a new concept. Globally, around US$15 billion dollars of equity is released annually, and this is expected to climb to US$50 billion dollars by 2031.

This can be a practical solution to the challenge facing many retirees of having a high-value asset but with limited liquidity (or cashflow). Equity release products allow homeowners to access funds for living expenses, healthcare, or other financial needs while continuing to live in their home.

You will probably be familiar with one type of equity release: the reverse mortgage. This involves the homeowner taking out a loan against the value of their property. Typically, the loan plus accumulated interest is repaid when the home is eventually sold.

Until now, a reverse mortgage was the only option for Kiwi retirees to access the wealth tied up in their home without selling up.

The debt-free home equity release alternative does not require a mortgage, debt, or payment of interest. Instead, the homeowner sells a slice of their home to a service provider, who pays for it as either a lump sum or through regular income payments, normally at a discount. For example, a provider may buy 35% of the homeowner’s equity for 25% of its value. This difference in value recognises that no interest is charged to the homeowner under the debt-free model.

Like with a reverse mortgage, the homeowner retains the right to live in their property rent-free until the home is sold, at which point the proceeds are shared according to the proportions of ownership.

A single person or a couple where the youngest is at least 70 years old who own their home outright.

In a nutshell, Lifetime Home buys a portion of the home based on a mutually agreed independent valuation and pays the homeowner a regular income stream over ten years. This income is paid the same day as NZ Super and can be fortnightly or every four weeks.

Unlike traditional loans or mortgages, debt-free equity release does not add to the homeowner’s debt burden. Instead, it allows them to access the wealth tied up in their home while continuing to live in it. The income they receive is based on the equity sold, not borrowed funds.