Reverse mortgage calculator — and how it compares to Lifetime Home
If you own your home and need more income than NZ Super provides, there are two ways in New Zealand to turn some of that house into money without selling it. You can borrow against it with a reverse mortgage, or you can sell a slice of it to Lifetime Home.
They sound similar and they are not. One is a loan that compounds. The other gives up part of your ownership permanently. Which leaves you better off depends on interest rates, house prices, and how long you stay — and neither provider is going to model the other one for you.
These calculators do. Enter your own numbers in the purple cells and see what each would actually cost you.
What a reverse mortgage actually costs
You borrow against the house, make no repayments, and the loan is repaid when you sell, move into long-term care, or die. Interest compounds the whole time, which is what makes the timing matter so much.
How much you can borrow depends on your age. Heartland's rule is your age minus 40, as a percentage of the home's value — so 25% at 65, 30% at 70, 35% at 75. SBS lends more conservatively, generally around ten percentage points lower at each age. The calculator uses the higher figures as a maximum, and you can change the percentage.
The calculator shows the loan balance at five-year intervals and what equity is left at each one, across a range of house price growth rates. Enter the loan, the age you'd start, and a rate.
Rates as at August 2026: Heartland 7.99% p.a. from 5 August 2026, SBS 8.24% p.a. Both are floating and both change — check Heartland and SBS before you rely on any number here. The calculator defaults to a deliberately conservative rate rather than today's, because a loan you hold for fifteen years will see rates you can't predict.
Heartland is currently the cheaper rate, but SBS is generally lighter on the one-off charges - set-up, drawdown and valuation. Which works out cheaper depends on how much you borrow and how often you draw.
Lifetime Home
Lifetime Home buys a share of your home and pays you an income for ten years. No loan, no interest, no repayments. You receive 2.5% of the agreed value each year, less fees, while Lifetime's stake builds at 3.5% a year to 35% after ten years. You keep 65%, and the right to live there for life. There's a 0.23% annual fee based on the home's value at the start.
You need to be 70 or older, and the income stops after ten years.
On a $1 million home that's around $22,700 a year, paid fortnightly on the same day as NZ Super.
Which one leaves you better off?
This is the question neither provider answers, and it's the reason this page exists.
The honest comparison has to hold the income constant. The same money in your hand each year from both products, and then look at what's left in the house. That's what this calculator does.
What the numbers tend to show:
Over ten years, the reverse mortgage usually wins. At a 9% rate and 3% house price growth on a $1 million home, you'd be roughly $65,000 to $75,000 better off with a reverse mortgage than with Lifetime Home, on the same income. Lifetime only comes out ahead in fairly extreme combinations - house prices flat or falling while rates run well above 10%.
Past about fifteen years, that reverses. Lifetime Home's cost is linear. A set slice of equity each year, and it stops once Lifetime reach 50% however long you stay on. A reverse mortgage compounds, with no ceiling at all. Run the comparison calculator out to fifteen years at a low growth rate and the advantage crosses over.
One case worth knowing the calculators don't cover. If you take the standard ten-year Lifetime Home agreement and then simply stay put. Income stops, your 65% share is fixed, and the house keeps appreciating. Lifetime Home does better still against a reverse mortgage that carries on compounding. That's a common situation and it's the strongest case for the product, but the calculators model the extended agreement rather than the stay-put one, so you'd need to work it through by hand.
So the length of stay matters more than almost anything else. If you expect to be in the house another twenty years, Lifetime Home's fixed cost starts to look like the cheaper deal. If you're likely to move or sell within ten, the reverse mortgage almost certainly leaves you with more.
What these calculators don't include
One-off fees. Set-up, drawdown, valuation and discharge charges vary between providers and change often, and against a loan of a few hundred thousand compounding for a decade they're rounding error. They're real money though. Heartland's current arrangement fee is $920, and a full valuation costs more than the $17.41 online estimate. Deduct them from the results. Both providers publish current schedules: Heartland and SBS.
Your legal fees. Both products require you to get independent legal advice, and you pay for it.
Rate changes. Both reverse mortgage rates float. The calculator holds your rate flat for the whole term, which no floating rate does.
Before you use either of these
Both are expensive. I'd treat them as a last resort rather than a first option, and I'd want to know you'd exhausted the alternatives: part-time work, a boarder, rates relief, downsizing, selling another asset, cutting spending, or borrowing from family. On that last one, if your family stands to inherit, they may well prefer lending to you over watching compound interest eat the estate.
If you do go ahead, two rules do most of the work:
Borrow as little as you can, for as short a time as you can. Just because you can borrow 30% doesn't mean you should. The difference between a 10% loan and a 30% loan over thirty years is the difference between needing 2.2% annual house price growth to break even and needing 5.9%.
Don't start earlier than you have to. You can get a reverse mortgage from 60, ten years before Lifetime Home is even available. That's ten extra years of compounding.
Neither of these is a reason to avoid the products entirely. If using some of the house is what lets you live properly in retirement, that's what the house is for. You only get one go at it.
One thing to know about the provider
Heartland has agreed to buy TSB and merge the two into TSB Heartland Bank, targeting completion in December 2026. No changes to the reverse mortgage product have been announced. Worth knowing when you're signing up to something you may hold for twenty years.
Want someone to look at this with you?
These are big, hard-to-reverse decisions, and both providers have an interest in the answer. I don't sell either product.
If you'd like to talk it through with an independent adviser, get in touch for a free 30 minute chat. Bring your family and your lawyer into it too. This is the kind of decision that benefits from more than one set of eyes.
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