Paying for Aged Care Costs
How it Works
Aged Care Loans are designed to assist those entering Aged Care to borrow funds against the security of the family home.
These loans are of particular value when a family member needs to remain living in the family home, or there is a particular desire to retain the family home.
The Loans can be drawn as
· Lump Sum (i.e Pay the Refundable Accommodation Deposit)
· Regular Instalments (pay Daily Accomodation Payment and other fees)
· Or as a combination of both
· Use funds to prepare the home for sale
The Loan does not require repayments until the end of the loan as the monthly interest charge is added to the loan. However if funds are available payments can be made which reduces the capitalisation of interest.
The Loan is repayable after 5 years, Or upon sale of the home, Or the death of the last surviving borrower.
These loans are highly regulated by ASIC and can only be arranged by Australian Credit licensees or their authorised representatives.
If you own a property we can probably help you finance the aged care you or your loved one deserves. You may be surprised at what is affordable
These loans require no payments until the end of the loan term.
The loan usually takes between 4 to 6 weeks to settle from application date.
Reduce the level of "Means Tested" fees payable.
The amount paid as the RAD (Refundable Accommodation Deposit) PLUS any amount invested (the surplus funds from the sale of the home) will be assessed as assets, leading to a higher Means Tested fee. If you retain the home, it is treated as concessional asset and has a deemed value (set by the government and has no relation to the value of the home), this set amount plus the amount paid towards the RAD is usually considerably less than the amount the house would sell for, and so keeping the house and borrowing for a RAD can mean lower fees. But this can vary, so your scenario should be checked before making a final decision.
Generate extra (pension exempt) income for your family member whilst they are in care.
Any income earned from the rental of the family home can be used to pay for other aged care costs or it can be paid off the loan. The house is also exempted from the pension asset consideration under certain circumstances.
Protect the levels of Pension and/or D.V.A. entitlements for your family member.
The "deemed interest" income earned from the invested funds from the sale of the Family Home may well affect the amount of Centrelink and DVA entitlements. A hasty decision to sell the home could seriously affect your Family Member's ongoing income plus incur taxation implications.
Significantly increase the future value of the Family Estate.
The sale of the Family Home means the benefactors of the estate may forgo considerable capital gain as the property appreciates over time.