Financial solutions for retired homeowners

A home equity release loan (sometimes referred to as a “reverse mortgage”) is a loan extended as a lump-sum or multiple payments to borrowers over a certain age where their residential property is offered as security for the loan – rather than to sell the property and live from the proceeds, a loan is taken out against the property as security.

Water Financial currently offers this to anyone over the age of 70 years.

The amount of money you receive depends on the value of your property, with the maximum monthly payment to you quoted as a loan over 60 months. We will supply a no obligation quote once we have details from you.

We charge interest on the outstanding loan balance at a variable rate linked to the SA Repo Rate dependent on a variety of factors such as age, property, location, etc. This rate is algorithmically determined and made clear in a no obligation quote before any agreement is signed.

Interest and costs are settled first so only a portion of the interest payable over the term of the loan is compounded. This ensures that the debt amount doesn’t spiral.

Yes, we are required by law to do an affordability assessment, which also includes a credit check. This does not cost you anything.

The process typically takes a few weeks from the date of application to the date of closing. The time frame may vary based on the length of time needed to approve the loan application and complete other parts of the process, such as the home valuation.

The full loan amount is due upon the death of the borrower and is payable by the deceased’s estate.

Yes, the loan is repayable if you sell the house (our security for the loan), or permanently move out of the property, or if you are liquidated or sequestrated. The loan is repayable if you simply decided to cancel it (2 months’ notice is required), or if there is any material breach of the loan agreement (for example, if you fail to maintain the property or to maintain adequate insurance cover).

No, although it’s advisable to inform your heirs that you are entering into this agreement as it will affect their inheritance.

No, home equity finance is available only if you own the property without any limitation of your rights.

Yes, but the loan will need to be settled in full either from other sources or from the proceeds of the sale. Simply let us know and we will generate a statement for the outstanding amount. We will also liaise with your attorneys attending to the sale and bond cancellation.

Yes. If your financial situation changes—you win the Lotto for example—you can settle the outstanding balance.

Yes. You can use the monthly payments made to you for anything, such as unforeseen repairs to your car, medical bills, personal debts, financing home repairs and renovations, paying for in-home care, or simply spoiling the grandchildren!

We use an independent property valuation expert to ascertain the current market value.

Absolutely. We encourage family members to be involved in their loved one’s decision. It’s helpful if everyone involved understands the plan. We can include family members on phone calls and send them educational materials.

There are costs involved and they need to be settled separately or added to the loan amount. Our conveyancing lawyers will quote these costs before any commitment is made.

Yes, we are registered as a credit provider with the National Credit Regulator and have also applied for a financial services provider license under the Financial Advisory and Intermediary Services Act (FAIS) to dispense financial advice.

Yes, but only in some instances: our credit committee will work with you to ensure these capital withdrawals for cost reductions to the running of the household or to generate additional income.

If the value of your home increases, your equity increases. This means that if the home is sold to repay the loan after you pass away or decide to leave, more funds will be left over for you or your heirs. If there is a significant increase in value, you can also apply to us to refinance, which may allow you to withdraw more of the equity in the home.

Theoretically this is possible, however, since this is in nobody’s best interests, we are conservative with the loan relative to the value of the property, we reassess that value and the funding at regular intervals, and work with you to ensure that the loan will never exceed the value of the home.

Yes, you are required to maintain a comprehensive homeowner’s insurance policy––if you don’t have a policy we can help you finalise one.

Yes, your home should be maintained to its current (valued) state and not be allowed to deteriorate, so that the value doesn’t fall.

No, you receive the monthly withdrawals under a loan agreement and it does not constitute “income” subject to tax.

Yes, comprehensive statements are sent quarterly via e-mail, as are annual reviews.

Yes. It’s so important to research and verify home equity finance lenders. Often in a home equity finance scam, the victim is acquainted with the scammer, but some lenders purposely mislead prospective borrowers too.

No. Freedom Finance allows homeowners to retain the title and ownership of their home. If you cannot repay the loan from other funds, you may need to sell your home to settle the loan.

Thanks for asking! If you’re interested, contact us for an application form.

Yes, but only in some instances: our credit committee will in our sole discretion allow this and work with you to ensure if these capital withdrawals can assist with cost reductions to the running of the household or to generate income.

Theoretically this is possible, however, since this is in nobody’s best interests, we are conservative with the loan relative to the value of the property. We reassess the that value and the funding at regular intervals, and work with you to try and avoid that situation and provide advanced notice.

No. Freedom Finance allows homeowners to retain ownership of their home, although the home serves as security for the loan. We retain the title deed of your property for the term of the loan just to avoid the house being sold without settlement of the loan.