Heartland’s statistics for 2025 list the top uses in order: home improvements, servicing existing debt, extra income, holidays, replacing a car, medical costs, gifts and homeware. Most borrowers name several. The average initial loan is around $82,000 and the average borrower is 73.
The lenders do not restrict what you spend it on. That does not mean every use is a good one, and the difference usually comes down to whether the money buys something that lasts or something that is gone.
Home Repairs, Roofs And Heating
The most common use and, in my view, the soundest. A new roof, re-piling, a heat pump, a bathroom you can get in and out of safely, a ramp or a stairlift. These spend the house’s equity on the house itself, often add to its value, and let you stay in it for longer.
A $25,000 roof on a $900,000 home is under 3 percent of the value. Drawn once, at 75, and running ten years, it costs around $57,000 by the end. Measured against a decade of living in a dry house, most families consider that a fair trade.
Clearing Credit Cards And Personal Debt
Credit cards at 20 percent and personal loans at 12 to 15 percent, carried into retirement, are expensive and the repayments eat Super. Rolling them into a reverse mortgage at 8.25 percent with no repayments is a genuine improvement.
The catch is behavioural. If the cards are cleared and then run up again, the problem has been made worse, not better. I ask clients who are consolidating debt what caused it and whether that has changed. Where it has, the reverse mortgage is a good tool. Where it has not, it is a loan that will be needed again in three years.
A Reliable Car
An older person without a reliable car loses independence quickly, particularly on the Shore where public transport does not reach everywhere. A $20,000 car financed through a reverse mortgage costs no repayments and roughly $1,650 in the first year’s interest. The same car on dealer finance would cost repayments of $450 a month or more.
Buy the car you will keep for ten years, not the one you will replace in four.
Topping Up NZ Super Each Month
Heartland’s monthly advance, minimum $300 a month for one to ten years, exists for this. A couple whose Super falls $400 a month short of a comfortable life can close the gap without a lump sum sitting in a bank account accruing interest.
Because each month’s advance has only just started compounding, this is the cheapest way to draw the money. $400 a month for ten years, about $48,000 drawn, costs around $25,000 in interest by the end of the term at today’s rate, against roughly $61,000 if the $48,000 were taken up front.
Before doing this, check Work and Income entitlements. Several clients have found a rates rebate and an Accommodation Supplement that covered part of the gap without borrowing.
Medical And Dental Costs
Hip and knee replacements done privately to avoid a public waiting list, cataract surgery, hearing aids, dental implants. These are among the uses families feel best about afterwards. The amounts are usually moderate, the benefit is immediate and the alternative is often years of pain or dependence.
Helping Children Or Grandchildren
The most emotionally loaded use and the one where I most often advise against borrowing the amount first proposed.
Giving a child $150,000 towards a house, borrowed at 8.25 percent compounding, costs the estate perhaps $340,000 over ten years. The child’s siblings will inherit less by that amount and may not have agreed. There are usually better structures: a family guarantee on the child’s own mortgage, which costs nothing unless it is called; a smaller gift; or a documented loan repayable from the estate.
Smaller gifts, a grandchild’s school fees or a contribution to a wedding, are a different matter and can be a joyful use of the money. Just be clear-eyed about the cost and tell the other children.
Travel
A trip to see family in Australia or the UK is a legitimate use of your own equity in your seventies. The lenders list it among common uses and so do I. The questions are the same as for any discretionary spend: is this once, or every year? A single $15,000 trip is a small draw. $15,000 a year for a decade is $200,000 by the end, compounding on top.
The Uses That Rarely Stack Up
Investing. Borrowing at 8.25 percent compounding to invest in anything is a bet that the investment will beat that return every year, after tax. It rarely does, and the downside lands on the house.
Lending to a child’s business. Combines the gift problem with business risk. If the business fails the house still carries the loan.
Spending because the reserve is there. A reserve is for things that need doing. Drawing it for things that would be nice is where modest loans become large ones.
Replacing income you could claim. Rates rebates, the Accommodation Supplement, the Winter Energy Payment and the Disability Allowance should be checked before any borrowing to live on.
If you want to talk through a specific use and see what it would cost over ten years, that is the first part of any conversation with me, and there is no charge for it. Book a chat or run the figures on the calculator.
