After the Government extended its mortgage deferral scheme for hard-up borrowers to March 31 this week, home loan customers can opt to pause payments on interest or principal payments with their bank. Yet reverse mortgage specialist Heartland says brokers should also consider equity release products as they weigh up their options.
Ford believes reverse mortgages could prove a better option for borrowers over 60 who may have lost their job during the pandemic.
"It might offer them a permanent solution, giving them flexibility and peace of mind," Ford told TMM Online.
Ford said brokers "spent a lot of time and effort helping customers" when the mortgage deferral scheme was first announced, and said a reverse mortgage could be "another tool" to engage customers with.
Heartland said "the relief may only be temporary" for some borrowers, while for those without income, "the deferral may not be an option at all".
More customers in New Zealand have turned to reverse mortgages in recent years according to Heartland's accounts. The firm's reverse mortgage book grew by $26 million to $536 million in the six months to December 2019.
Reverse mortgage products allow customers to release equity in their home in the form of a loan, which is paid back to the bank when the house is sold or the last occupant has left the home.
Heartland believes older homeowners, particularly those reliant on part-time work, could be faced with a stark choice over the coming months.
"In the absence of a mortgage deferral scheme or a reverse mortgage, older borrowers may have no choice but to leave their home," the bank said.