Reverse mortgages
Reverse mortgages, NZ Super and other help
NZ Super is not reduced because you borrow against your home. Extra help that looks at cash or other income can change, so it is worth checking before you draw the money.
NZ Super is not means tested
New Zealand Superannuation is paid on age and residence. It is not income tested and it is not asset tested. Taking a reverse mortgage does not, on its own, reduce it. You still use the correct tax code if you have other taxable income.
Work and Income treats money from a home equity conversion scheme, such as a reverse mortgage, as a loan rather than as income, whether it is paid as a lump sum or as regular payments.
Extra help can change
If you leave the money in the bank, it is a cash asset. That can affect the Accommodation Supplement, Temporary Additional Support or Special Benefit. Interest you earn on money you have not spent can count as income. Regular drawings, or a lump sum you use for day to day spending rather than a major cost, are things Work and Income asks you to tell them about.
A residential care subsidy has its own asset rules. Cash from a reverse mortgage can count even when the house itself is treated differently. Ask about that before you draw a large sum you might need for care later.
Rates help is separate
The Rates Rebate is a discount on the rates of a low-income household, run by your council under a scheme from the Department of Internal Affairs. It looks at household income, dependants and the rates bill. It is an alternative to borrowing for rates, not a feature of the loan. Ask the council how a drawdown would be treated in your rating year before you rely on either.
The decision is yours as the homeowner. Family may have a view, and it is worth talking it through, but the choice is yours.
General information only, not advice. We're a referral service and may receive a commission. If a reverse mortgage settles, the lender may pay us a referral fee.
- Work and Income: home equity lump sums
- Rates Rebate eligibility on govt.nz
- Sorted: money in retirement
Questions
- Will my NZ Super go down?
- No. NZ Super is not reduced because of a reverse mortgage, your savings, or your other income. Tax on other income is a separate matter.
- Do I have to tell Work and Income?
- Tell them if you get Accommodation Supplement, Temporary Additional Support or Special Benefit, if you will hold the money as savings, or if you will take regular payments. The drawdown is not income, but cash you keep can still change that extra help.
- Does this affect the Rates Rebate?
- The rebate depends on household income and your rates. Ask your council. Do not assume a drawdown leaves the rebate untouched, and do not assume it cancels it.