Seniors in St. Louis who want to age in their own homes a little longer now have an alternative to reverse mortgages, and it also gives older adults more time to decide their next moves, according to the backer.

New York-based Truehold, a real estate and home services business, launched a sale-leaseback program earlier this year that allows homeowners to sell their home at 100% of their value, receive the home equity in debt-free cash and then lease back their homes for as long as they like.

According to Nick Machesney, vice president of product and experience, the program won’t encroach on the long-term care market, but it will allow older adults to take their time in determining the next step in their golden years, whether that is to receive care at home or move into assisted living community or other long-term care setting.

The concept is not unlike what happens in commercial real estate, he said.

“We saw a real nice market opportunity here, where seniors who oftentimes have their wealth tied up in home equity, just like the large companies do, where they have a lot of their money tied up in real estate. We saw a similar parallel there,” Machesney told the McKnight’s Business Daily.

The sale-leaseback program uses a “completely different financial instrument” from reverse mortgages, he said. 

“Where a reverse mortgage is essentially a loan, using the home as collateral, the leaseback is not a loan, it’s not a debt,” Machesney said.

Homeowners sell their homes outright to Truehold at market value, then pay a monthly rental fee to stay in theirs home for as long as they wish. If a spouse moves to a long-term care facility or dies, the remaining partner can continue to live in the home as long as the lease remains up to date.

“The benefit compared to a reverse mortgage is, one, you get 100% of your home equity out, where a reverse mortgage is generally in the 40-to-60% range, because the rest of the equity escaped and held as debt,” Machesney said. “You’ve got more financial freedom.”

Once the home no longer is needed, the company would either lease it to other older adults or sell it, depending on the market.