Selling to family - Theresa

Theresa owned her own flat, worth $140,000, but by the time she was 70 she'd spent nearly all her retirement savings. She liked to travel and needed to supplement her New Zealand Super by $5,000 each year.

Theresa knew that the only way she could get this extra money and maintain her lifestyle was to unlock the money she had in the flat.

She had two children in their 40s who were beneficiaries in her Will. Her son was struggling financially. But her daughter Colleen was mortgage free and was saving $1,000 a month.

Colleen made an arrangement with her mother, with the approval of her brother. Colleen would lend her mother $5,000 each year, repayable when the flat was sold after Theresa's death. Interest would be charged at 5%. The family got a lawyer to properly document the arrangement, and Colleen took a mortgage over the flat to secure both the money she was giving her mother and the interest that was accruing.

Theresa was relieved that she could continue to enjoy the lifestyle she was used to, and stay in her home. It was the right solution for her. When she died and the flat was sold, Colleen was repaid her loan, with interest. The balance was split equally between Colleen and her brother, according to Theresa's will.