Andrew Ford, deputy chief financial officer and head of retail at Heartland Bank, says the lender is seeing "strong demand from retirees who want a more comfortable lifestyle". 

Ford says customers are turning to reverse mortgages to pay off other debts, provide a little bit more cash for a better retirement, refinancing, travel and home improvements.

He believes the perception of reverse mortgages is beginning to change, with the option no longer seen as "one of last resort", but a way of unlocking a bit of extra cash in retirement.

"Most of our customers don't want anything extravagant," Ford says. "It might just be an extra $500 a month to take the grand-kids out."

Heartland's gross finance receivables for reverse mortgages in NZ grew to $561.2 million last year, up 11.4%. In Australia, it grew to $757.6 million, up 24%.

Ford says the concept of using home equity is quickly becoming "more advanced". 

He says reverse mortgages can be a "valuable tool" for advisers looking to free up equity for clients: "I've heard of lots of people who want to retire but can't because of existing debt. Under the Responsible Lending Code it's harder for older people to get a regular mortgage. Reverse mortgages can really help."

Heartland cut its reverse mortgage interest rate to 6.95% on October 1.