MAXIMISING YOUR RETIREMENT BENEFITS
By Sandra Dignam - The Seniors Loan Specialist
The decision to move the aging into an Aged Care facility can be very stressful, guilt-ridden and overwhelming for the aged person, and for their family. One solution that can assist all concerned is the Aged Care Loan.
The Aged Care Loan can lessen the financial burden by providing a viable way to meet the financial costs, especially if the partner is still living in their home.
The Aged Care Loan can lessen or postpone the emotional toll of breaking ties with the home, loved possessions, and life-long happy memories for the aged person and their family.
On occasion some offspring believe their inheritance is being eroded. On the other hand, selling the home or finding the finance elsewhere is usually more expensive. The Seniors Loan Specialist can help you understand this more fully.
The Aged Care Loan is a special type of Reverse Mortgage which releases equity from the applicant’s home specifically to pay for Aged Care costs. An Aged Care Loan is usually taken for a term of 3 or 5 years, but an extension can be applied for if necessary. It can be applied for by the borrower, usually with the help of their children, or under a Power of Attorney.
The primary cost of entering Aged Care is the Refundable Accommodation Deposit (RAD). There may also be a Daily Accommodation Payment (DAP), Basic Daily Fee, A Means-Tested Care Fee, and Additional Services Fee.
The Aged Care Loan enables the recipient and their family to access funds to meet these costs without resorting to selling the borrower’s property or other assets. In addition to meeting the Aged Care facility costs, the Aged Care Loan can repay existing debts and if required, be used to improve the property and prepare it for rental or sale.
Taking an Aged Care Loan can greatly reduce the stress associated with moving into an Aged Care facility, for all concerned.
The loan drawings can be flexible to meet costs as they arise, taken as a lump sum or through regular payments to a bank account.
Interest is charged like most loans and is added to the loan amount. No regular repayments are required but repayments can be made at any time if funds are available.
If the property is rented, the rent can offset the interest, minimizing the capitalization effect of the loan. Capital gains can also minimize the effect of capitalizing interest. (See diagram in Seniors Lifestyle Loan article)
The loan is repaid at the end of the loan term if not re-negotiated, or when the property is sold by choice, or within a reasonable timeframe following the death of the last borrower, usually between 6 and 12 months. This allows sufficient time for probate and settlement of the estate.
It is our pleasure to help you further. For more information about an Aged Care Loan, call The Seniors Loan Specialist on (02) 9653 2034 or 0414 903 443.