Heartland Bank has introduced “Village Access Loans”, a bridging finance option that enables retirees to move into a retirement village without needing to sell their homes immediately.
“Financing the needs of older Kiwis is a speciality of ours. Designed to remove the barriers to entry, Village Access Loans bridge the gap between moving from one stage of retirement to another,” chief executive Leanne Lazarus said.
According to Lazarus, moving into a retirement village typically requires making an upfront lump sum payment, known as an occupation licence payment, to the village operator or owner. This often prompts people to sell their current home to cover the cost. However, this can be problematic when housing prices are low or when coordinating the sale and move proves difficult.
“With this product, we saw an opportunity to reduce some of the stress older Kiwis face when having to sell their home to move into a retirement village. Often people are selling family homes they’ve been in for generations, which is emotional and challenging enough without adding factors like market conditions,” Lazarus explained.
“Village access loans give people an alternative way to fund the move by allowing them to borrow against the equity in their home and postpone the sale of their property to a more convenient time.”
People can borrow up to 50% of their home’s value to generate the necessary lump sum for moving into a retirement village.
The loan has a maximum term of three years, and no regular payments were required. Customers also have the flexibility to make voluntary repayments or repay the loan early if they prefer.
The Village Access Loan’s variable interest rate is currently set at 9.59% per annum, though it is subject to change.
Heartland Bank also warns that customers failing to meet the terms and conditions of the loan may incur a default interest rate of up to 2% per annum above the prevailing interest rate.