Does anyone know what interest is dharged by the company offering to lend money on your home? I'm asking on behalf of an oldie, 84 yrs. Thanking you.

Hi Bobbity
I assume you are referring to the Bluestone product. It depends on whether you want fixed for life or capped for life. The rate offered to you will be higher than you could get on a normal mortgage - up around the 10% mark as a guide.
There are a number of options besides Bluestar and if I knew the situation I would be happy to advise.
Also I have heard advance news of another product coming out soon where you pay no interest or repayments. Here you simply give up 15% of the equity in your house to a trustee and receive a cash payment which is 10% of its current value. You can still sell later and keep 85% of the sale price for a smaller property or a retirement unit.
If you would like more information please send me an e-mail at bruce@directhomeloans.co.nz

it was the scheme whereby you borrow money on the value of your home, you do not pay any money back at all, but interest is charged, and when you die the money and interest is taken out of the sale of the home.
You can borrow what ever amount you like.
thanks Bruce but I think we are talking about 2 different things?.

ANZ have a 'flexi plus' scheme.

it is like an overdraft against the value of your home.
it works that you use the money to the limit of the amount you agree on and only pay the interest on the balance at the end of each month.
this interest is charged to the account.
low interest ie 8.5 % approx.
some small charges.
if you dont pay the interest it is added to your account.
the beauty of this is that any income is put into the account and any windfall money (selling assets etc) immediately reduces the interest charge

ie
flexi of $20.000
buy car $15000
pay interest on $15000 only but this is added to the overdraft if not paid till limit on the account is reached.

and sentinel wants some $1000 aprox set up fee for exactly the same thing
the samne with others they are in it for more money than the ANZ charges for their flexi account.


well worth looking into this sort of account.
soveriegn insuranced is promoting a similar scheme.

thanks for that Piersdad..do you know who the 1st ever company was that offered a no pay back scheme for people over 60? Seems there has been a lot of companys that have mimiced it since then.

bobbity
i am suspicious of these companies as if they think it is a good thing then they must see big profits in it for them.
so i would tread very carefully and do the sums right past your eventual passing the property on to your children if any.

it seems to me in a vague way that they are getting onto the property market and relying on the increase in value of your property to make their profits.
there are a lot of new comers in this market and if there is not a way they can skim off large profits then the rush to make these types of finance available makes me very suspicious of their methods and ultimate result.

for instance if your property value dropps drastically and the value of the loan the finance company is more than the value of the house
what happens
believe me this can happen and leave you with nothing

despite what people say -- particularly the finance ppl and the banks and the polititions the risk of another recession is very high at the moment and i personally are arranging my financial situation to protect my family in case this happens

even soverign insurance are in this sort of finance.
so i will be waiting till the dust settles and see what comes up before any decisions

Very wise piersdad, and thank you.

I might just add, that since posting my original question, I have had heaps of spam telling me I have been pre aproved for refinance on my morgage..hee hee..i don't even own a home. I was asking this question for an old (84 yr old) friend.

Bobbity how did they get your email? I don't see emails posted here any longer?

we are thinking of using an equity release on our property, as we are struggling to manage on just the pension which is all we have although we have both worked hard over the past 50years we lost money in a business which we put our retirement money into hoping the investment in that would
get us through our older year.
We have raised 4 daughters and not had overseas trips other than to Australia
I guess we are lucky no to have had investments in companies that have cost
investors many thousands of $'s but it still hurts, most of them had several
investments scattered, which is helping them to get by.