Aged care finance

What is the Best Way to Fund Your Aged Care Costs?

FREE guide from Seniors First. Downloaded by thousands of Australians since its introduction in 2008.

Traditionally people have often sold their family homes to pay for entry fees (what were known as ‘Accommodation Bonds). But with the government’s current emphasis on a ‘user pays’ system, retaining their homes and using aged care finance (such as a Reverse Mortgage) is an increasingly attractive option.

In July 2014, the Living Better Living Longer reforms came into force. People moving into aged care are now required to pay one of the following as an ‘entry fee’ for aged accommodation:

  • Refundable Accommodation Deposit (RAD)
  • Daily Accommodation Payment (DAP)

The ‘RAD’ is an upfront lump sum payment to a nursing home. The fee is set by the facility, and although the current average payment amount could range from is $300,000 to $400,000, it can be much higher in some areas.

In addition, a new ‘Means-Tested Daily Fee’ has been introduced which may add significantly to your overall care costs if the house is sold. Using a Reverse Mortgage to fund or part-fund your aged care accommodation is now a viable alternative for you.

How Does Aged Care Finance Work?

Looking into the fees and charges associated with aged care finance can be quite confusing. It is beneficial to take professional help before deciding on your aged care finance. Seniors First has some valuable resources and access to a number of lenders who can provide Reverse Mortgages to pay for aged care following the guidelines set by the Government. This allows the borrower to release up to 45% of the home value (depending on the age of the borrower) with no requirement for regular monthly repayment - the interest is capitalised each month onto the loan balance.

The amount borrowed, plus any accumulated interest (including compound interest) and fees are then repaid when the property is eventually sold.

So, for pensioners and retirees who have a limited income, Reverse Mortgages are the preferred method for aged care finance. In some cases, where self-funded retirees have enough income to service a conventional mortgage, Seniors First will recommend a home or investment loan to finance aged care & accommodation.

A Reverse Mortgage loan may be a good solution for aged care finance if:

  • the family wants to retain the home for emotional reasons
  • a spouse or family member is still living in the home and a sale is not possible
  • the resident wants to keep the option of ‘moving back home’
  • it is a poor property market and a bad time to sell the home
  • your financial planner recommends this as a strategy to minimise your costs or improve your cash-flow

What Our Clients Say...

Andrew Cate from Seniors First was amazing, he managed to arrange my reverse mortgage seamlessly. Working with him made the whole process completely painless and he explained every step along the way. I have no hesitation in recommending him to anyone thinking of this kind of mortgage Thank you so much Andrrw and Seniors First!

From the outset Andrew Cate was very helpful, considerate and very informative. He was available to answer questions at all times and we appreciated his professionalism and understanding of our needs during our application. Highly recommended. Thank you Andrew from Michael and Cherie Nikolaidis

Outstanding customer service received from Andrew Cate, Reverse Mortgage Specialist who expertly guided me through the loan process and kept me informed every step of the way. Sincere thanks to Andrew and Seniors First .. the loan has been life changing.

We recently completed a transaction through Seniors First and have been very impressed with the way it has been handled. we would have no hesitation in recommending them to anyone looking to secure their future requiements for finance. In particular we were looked after by Andrew Cate who gave us great help throughout the process.

Angela Femia
Michael Nik
Deborah Collett
Kaye Kinsey

How Seniors First Reverse Mortgage Can Help

Senior First can help you to find out how much equity you have in your home, and how you might be able to use it for your needs.

If you want to learn about reverse mortgages in detail, you can download our guide, Reverse Mortgage Secrets.