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Case study: 'I used a reverse mortgage to get my knee fixed’

This lively 82-year-old is back travelling, biking, and dancing after using equity from his home to pay for a knee op.

9 March 2022

Brian Mosen was blindsided when his carefully saved NZ$50,000 nest-egg went “out the window” with the South Canterbury Finance crash in 2010.

Luckily, the former Wellington City Council worker and his late wife had paid off their mortgage.

Losing his savings only really became a problem when he stepped out of his car awkwardly one day, twisting his knee.

“I went to the doctor thinking it was an ACC job, but he took an x-ray and he said, ‘That’s no ACC job; you need a new knee!’

“There was a waiting period of 12 to 18 months for the operation. The pain was so bad. The only thing left was a private operation costing $28,000.”

Looking for a loan

He says in the old days you could get a Flexifund account from the Southland Building Society. “If you mortgaged your house with them, you just rang up and you could get $1000 any time you liked. You just paid interest.

“When I saw an advertisement for Heartland Bank’s reverse mortgages, I was used to using a property as security to get funds, so I was quite open to the idea.”

He says there were hoops to jump through.

“I had to get a valuation report and the original fees were a bit steep because you had to get a lawyer to look over the deal, and talk to a financial adviser.”

He also had to talk to his next of kin. “But I don’t really have any dependents.”

He had bought his house for NZ$380,000 and he was approved to withdraw up to NZ$120,000 of the equity in it.

He withdrew just NZ$15,000 and paid the surgeon’s receptionist the NZ$28,000.

A hitch

The patient was gowned up, shaved, and waiting for his op when suddenly the surgeon rushed in and shouted: “Stop, stop, stop!”

“He had my files in his hand and he said: ‘There’d be blood everywhere!’ The nursing staff had forgotten to tell me to stop taking my blood thinner.”

Within 15 minutes, he was back out on the street. “I suddenly realised I’d given him $28,000, so I rushed inside and said, ‘I want my bloody money back!’.”

They apologised because they could only give him back NZ$5000 at a time, but then the surgeon reappeared.

“He said, ‘I’ll do your operation first thing on Monday morning’.”

He recovered so well that he was soon back biking and ballroom dancing and was able to travel again.

Over three years he took out NZ$20,000 more to buy an e-bike and pay for holidays to Australia and Norfolk Island, where he met his new partner.

When he sold his flat in 2018 to move to Wanganui, he was delighted to find that inflation had increased his home’s value, so he was able to pay Heartland back the NZ$53,000 he owed with “a lot” left over.

“I could buy a 1972 house in Wanganui, but it wasn’t enough to pay for the renovations.

“It needed a new roof, new kitchen, bathroom, carpets, curtains and interior painting.”

He decided to go through the process again and used a reverse mortgage of NZ$15,000 to pay for the renovations.

He and his partner went on a couple of cruises before lockdown and drew down another NZ$15,000 in July 2021 as a backstop in case of emergencies.

“The total is now $31,600 and I don’t think there is now a need for any more. But you never say never.”

He says he believes Heartland’s reverse mortgages only worked for him because of his age and because he didn’t have dependents who expected a legacy. However, there will be equity in the house to leave for an adopted son.

“The main thing was the rapid rise in house prices.”

He doesn’t know why people fear reverse mortgages.

“People still can’t get it out of their minds that they have to pay it back. Because I’d had Flexifund, I’d got used to just paying interest. In fact, I enjoy the fact that I don’t have to pay it back.”

Heartland Bank will be repaid when he and his partner die or move out of the house.

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