Retired homeowners in SA could soon apply for a ‘reverse mortgage’
Retired South Africans who own homes but are cash-strapped may now apply for a loan, or “reverse mortgage,” suggested in a recent policy paper by the World Bank as a way to supplement pension income.
Lending company, Water Financial, led by financier and former COO of twenty20 bank, Chris Loker, has launched the financial solution for single retirees over 75 who own a home and who qualify.
The home equity release finance plan offers pensioners access to a percentage of their home’s equity while they retain full ownership. The loan is settled on sale of the house or death and interest rates are substantially lower than unsecured loans.
Termed Freedom Finance, the loan is being offered to qualifying homeowners on Cape Town’s Atlantic Seaboard initially and will later be rolled out across the country.
Loker explains that many pensioners are struggling to make ends meet due to the rising cost of living, mounting medical expenses and the detrimental impact of the Covid-19 pandemic.
“It’s hard to see parents struggling and it’s stressful for the elderly to battle with cashflow – particularly when they’re asset-rich. Instead of reluctantly selling their homes, they can now apply for a loan secured by their home, extended as multiple monthly payments,” he explained.
Loker said application for Freedom Finance was simple and included consulting heirs in the process. He said SA banks did not offer home equity finance so Water Financial had improved on successful global models to help pensioners live more comfortably.
“Retirement should not be a time of deprivation, austerity and regret,” said Loker.