Reverse Mortgage¶
| Product ID | PRD-012 |
| Launch tier | 3 |
| Jurisdiction | NZ + AU |
| Status | Planned |
| Regulations | CCCFA 2003 · NCC Act 2009 (NCCP) · AML/CFT Act 2009 · AML/CTF Act 2006 · Privacy Act 2020 · Privacy Act 1988 |
A reverse mortgage allows eligible owner-occupiers aged 60 or over to access the equity in their property without making regular repayments. Interest accrues and capitalises onto the outstanding balance each month. The loan is repaid when the property is sold, the borrower enters permanent care, or the estate is settled. Negative equity protection is guaranteed — the customer or estate will never owe more than the net sale proceeds of the secured property.
Key terms¶
| Term | Value |
|---|---|
| Eligibility | Age 60 or over; owner-occupier; minimum property value per credit assessment |
| Advance | Lump sum, regular drawdown, or line of credit (per facility deed) |
| Rate type | Variable; per rate schedule |
| Interest | Capitalises monthly onto outstanding balance — no scheduled repayments |
| Negative equity protection | Guaranteed — debt capped at net property sale proceeds |
| LTV at origination | Per credit assessment (typically 15–45% depending on age and property value) |
| LTV monitoring | Ongoing via MOD-066 — alert if LTV approaches configured ceiling |
| Independent advice | Mandatory before settlement — independent legal and financial advice required; attestation recorded |
| Repayment trigger | Property sale, permanent entry into care, or death of all borrowers |
| Statement frequency | Monthly (balance, accrued interest, current LTV) |
System capabilities¶
LTV is monitored continuously against current property valuations (MOD-066) — not limited to annual revaluations. ECL provision is calculated daily as the loan-to-value grows (MOD-031). The independent advice attestation is captured digitally before settlement as a hard gate in MOD-050 — no bypass path exists. Interest capitalisation is automated monthly with no manual journal required. The monthly statement shows balance, accrued interest, current estimated LTV, and negative equity protection status.
Eligibility¶
All borrowers must be aged 60 or over and must be owner-occupiers of the secured property. Minimum property value and maximum LTV at origination are set per credit assessment (MOD-027, MOD-028). KYC must be current per AML-003. Independent legal and financial advice must be completed and attested before settlement.
Account / facility opening¶
- Customer submits an application. Age and owner-occupier status are verified.
- MOD-027 and MOD-028 assess the property value, borrower age, and appropriate LTV.
- Independent advice is arranged and completed. The adviser's name, date, and confirmation of advice are recorded as an attestation.
- MOD-050 enforces the independent advice gate — settlement cannot proceed without a completed attestation on file.
- MOD-049 captures the customer's consent; MOD-050 delivers pre-contractual disclosures.
- MOD-007 opens the loan and disburses the advance per the facility deed.
Fees¶
| Fee type | Amount |
|---|---|
| Establishment fee | Per fee schedule |
| Valuation fee | Per fee schedule |
| Monthly administration fee | Per fee schedule |
| Early repayment (break) fee | Per fee schedule where applicable |
Fees are applied by MOD-110 and itemised on the monthly statement.
Interest / charges¶
Interest accrues daily at the variable rate and capitalises onto the outstanding balance on the last business day of each month. No scheduled repayments are required. The monthly statement shows the interest accrued and capitalised in the period, the cumulative outstanding balance, and the current estimated LTV.
Statements¶
MOD-113 generates a monthly statement showing: outstanding balance, interest accrued and capitalised in the period, current estimated LTV, original advance, and negative equity protection status. Statements are delivered to the customer's in-app document vault and retained for seven years.
Closing / exit terms¶
The loan is repaid on the occurrence of a repayment trigger event: sale of the secured property, permanent entry of all borrowers into residential care, or death of all borrowers. The estate or appointed representative arranges sale and repayment. The amount repayable is capped at net sale proceeds of the secured property — negative equity protection is unconditional. Any surplus after repayment is returned to the customer or estate.
Voluntary early repayment is permitted at any time. A break fee may apply per the fee schedule if the loan is on a fixed rate period; no break fee applies to variable rate balances.
Regulatory¶
New Zealand: Credit Contracts and Consumer Finance Act 2003 (CCCFA) — reverse mortgage specific provisions; Responsible Lending Code — mandatory independent advice obligation. AML/CFT Act 2009 per AML-003. Privacy Act 2020 per PRI-001.
Australia: National Consumer Credit Protection Act 2009 (NCCP) — reverse mortgage specific obligations under s18G; National Credit Code. AML/CTF Act 2006 per AML-003. Privacy Act 1988 per PRI-001.
Consumer protection obligations are heightened given the demographic profile of borrowers. CON-003 (vulnerable customers) applies to all origination and servicing interactions.
Governing policies¶
- CRE-002 — Responsible Lending Policy
- CRE-005 — Concentration Risk Policy
- CON-003 — Vulnerable Customer Policy
- CON-004 — Product Disclosure & Sales Practice Policy
- CON-005 — Fee & Pricing Transparency Policy
- CON-006 — Product suitability and governance
- AML-003 — Know Your Customer (KYC) & Identity Verification Policy
- PRI-001 — Privacy Policy
Implementation modules¶
| Module | Name | Status |
|---|---|---|
| MOD-001 | Double-entry posting engine | Deployed |
| MOD-002 | Immutable transaction log | Deployed |
| MOD-003 | Real-time balance engine | Deployed |
| MOD-005 | Daily accrual calculator | Deployed |
| MOD-006 | Rate change propagation | Deployed |
| MOD-007 | Account state machine | Deployed |
| MOD-027 | Affordability calculator | Deployed |
| MOD-028 | Credit score & risk rating | Deployed |
| MOD-030 | Stage allocation model | Deployed |
| MOD-031 | ECL calculation & GL posting | Deployed |
| MOD-044 | JWT role-based access control | Deployed |
| MOD-049 | Open banking consent management | Deployed |
| MOD-050 | Disclosure enforcement module | Deployed |
| MOD-065 | Credit servicing & collections | Deployed |
| MOD-066 | Collateral & security management | Deployed |
| MOD-068 | Authentication & session management | Deployed |
| MOD-105 | Product eligibility engine | Not started |
| MOD-110 | Fee engine | Deployed |
| MOD-112 | Amortisation schedule engine | Deployed |
| MOD-113 | Statement generation | Not started |
Compiled 2026-05-22 from source/entities/products/PRD-012.yaml