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As individuals approach retirement,
ensuring financial security becomes a paramount concern.
According to a recent UCT study,
34% of people over the age of 55 said
they are worried about running out of money in retirement


For many seniors, especially those grappling with financial constraints, exploring unconventional yet viable options becomes imperative. One such option, which is often misunderstood the world over (research shows only 6% of Americans over 50 understand the product) and particularly in South Africa – due to its scarcity – is home equity release finance (sometimes known as a reverse mortgage).

We delve into what to look out for when considering a reverse mortgage, shedding light on its positive aspects as a tool to enhance financial security in later life.

A reverse mortgage is a financial product designed specifically for the elderly.  Unlike traditional mortgages, where borrowers make monthly payments to a lender, a reverse mortgage allows them to convert a portion of their home equity into cash. The loan is repaid when the homeowner sells the home, moves out of the home, or passes away.


What to Look Out For


Interest Rates and Fees:

Whilst they may be higher than traditional mortgages, they can be outweighed by the benefits of not having to make monthly payments. Comparing alternatives like unsecured lending will help in finding the most favourable terms.

Loan Options:

Fixed vs variable rates have pros and cons so understanding the implications is vital as well as choice of lump sums, monthly payments or a line of credit.

Eligibility Requirements:

Homeowners must meet certain eligibility criteria to qualify including age, home equity, and the primary residence status. Being well-informed about these requirements ensures a smoother application process.


Legal, heir and financial advisor or professional service providers input can assist in making an informed decision plus full comprehension of the implications of using a product.


Why might you consider it


Supplemental Income Stream:

Provision of a steady stream of income to retirees, offering relief for those facing financial strain. This income can be used to cover daily living expenses, healthcare costs, or even to pursue long-delayed dreams and passions.

No Monthly Payments:

One of the most significant advantages of Home Equity Release is that homeowners are not required to make monthly payments. This can alleviate financial stress for retirees with limited income, allowing them to stay in their homes without worrying about meeting monthly obligations.

Retain Homeownership:

Contrary to common misconceptions, obtaining a reverse mortgage does not relinquish homeownership. Homeowners retain ownership of their homes and can continue to live in them which provides a sense of security and stability for seniors.

Protected Against Market Fluctuations

For those who choose an adjustable-rate reverse mortgage, there is a built-in safeguard against market fluctuations.

In conclusion, a reverse mortgage can be a viable and positive option for cash-strapped retirees seeking to enhance their financial security in later life. By carefully considering all factors, retirees can take financial advantage of the underlying performance of one of their primary investment assets – turning it from a dormant one into an income producer (see below for historical property price returns).


CPI inflation vs House price inflation


The encashment of these inflation beating historical returns could be the difference between a comfortable and not so retirement, particularly for those who living longer than anticipated – after all that should be a blessing rather than a financial curse.

It’s essential to approach this financial tool with a clear understanding of benefits and responsibilities, ultimately empowering seniors to experience a better quality of life if used correctly, which is why the World Bank has advocated for increased use of the product within developing countries such as ours.



If you would like further information,

please complete the following form
and a representative from Water Financial
will get back to you as soon as they can.




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  • Ginny du Toit says:

    This is a very interesting development! I seem to remember my older brother in the UK had such a thing as a reverse mortgage (not sure if that was what it was called). That was years ago, sometime around 2002.

    Would make a lot of sense unless you happen to be living in a Life Rights complex!

    • Marilynh says:

      Hi Ginny – you are absolutely 100% correct – it is a reverse mortgage. And a perfect solution for those who are asset-rich, but cash-poor.


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