''Paper millionaires'' with mortgage-free houses now have a new $300/month finance option to give them a more regular form of income as they age, an NZX-listed bank says.

New Zealand's biggest reverse mortgage financier, Heartland Bank, has this morning announced it will provide a monthly advance option on these types of loans.

Only lump sums were previously available but now the reverse mortgages can be monthly.

The loans appeal to often older people with debt-free houses but low incomes, usually only superannuation, so they gradually pull the money from their house as they age.

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Lisa Hatfield, Heartland's senior retail manager, said the bank now had a $365 million reverse mortgage loan book, up by $28m in the past year and growing strongly.

Heartland says the mortgages allow people to borrow against the equity in their homes, releasing cash without having to sell their houses. But it also says independent legal advice is mandatory before the loans can be granted.

"We encourage all customers to talk to family and we even highlight alternative options, in writing, so they can make an informed decision," Hatfield said

The schemes allow seniors to leverage the value of their home and provide them with more cash flow flexibility and financial freedom, she said.

"The new feature will allow seniors to opt to receive a minimum $300 monthly advance directly into their nominated account, or into their Heartland Direct Call account, which currently pays 2.75 per cent interest," Heartland said.

Some retirement specialists say the loans appeal to people who are ''paper millionaires'': asset-rich but cash-poor. But people must understand the decisions they're making and the implications of drawing on equity, specialists say. The downside of reverse equity is that people get into debt at the wrong time of life.

Hatfield agreed that the loans were not suitable for everyone but said Ministry of Social Development data show around 75 per cent of older New Zealanders own mortgage-free properties.