Moving into a retirement village often requires careful financial planning and timing. A new loan product has emerged that could help seniors manage this transition more effectively, offering greater flexibility and control over the moving process.
At least one institutional lender has “met the market” with a new product labelled as a Village Access Loan.
In this particular example, the Bank is offering homeowners the opportunity to utilise the equity in their home and borrow up to 50 per cent of the cost of entry into a Retirement Village (usually via what is known as an Occupation Right Agreement). In this way the loan serves as bridging finance, enabling the homeowner time to sell their property or defer the sale until a more convenient (or economic) time.
Effectively this loan product may enable retirees to secure the Retirement Village of their choice or to have more control over the timing of the process if health or other considerations are at play.
Not to be confused with Reverse Equity Loans, the Village Access Loan is intended for owners who are looking to exit their current property and is a more short-term proposition – the term will be limited to three years. A Reverse Equity Loan is to accommodate owners desiring to remain living in their own home. Accordingly, the Village Access Loan will only be available to applicants for the purpose of purchasing an ORA.
It will be interesting to see how the Retirement Village industry responds to this new development and looks to offer a similar or comparable financing option for residents and also if competing institutional banks offer a similar product for their customers.
We are here to help you navigate your transition to a Retirement Village. When the time is right for you, give us a call on 0800 277 529.