Funding Your Future: How Home Equity Release Can Support Aged Care Choices

How Home Equity Release Can Help with Aged Care Costs

As an Australian retiree, aged care costs can be a significant concern. Whether you’re looking to stay in your own home or move into an aged care facility, the expenses can add up quickly. But did you know that home equity release can help?

Understanding Aged Care Costs

Aged care costs vary depending on your lifestyle choices and as a result, different forms of home equity release may be more appropriate than others depending on your aged care choices.  Here are some typical expenses:

• Staying in your own home:
  • Home care packages
  • Additional services (e.g. cleaning, gardening)
  • Modifications for accessibility
• Moving into an aged care home:
  • Refundable accommodation deposit (RAD)
  • Daily accommodation payment (DAP)
  • Care fees

Government Supports in Aged Care

Fortunately, the Australian government provides various supports to help fund aged care costs. These include:

• Age Pension: A means-tested payment for eligible retirees
• Home Care Subsidy: A government contribution to home care package costs
• Residential Aged Care Subsidy: A government contribution to aged care facility costs
• Aged Care Fee Assistance: Assistance with care fees for eligible residents

These supports can help reduce the financial burden of aged care costs. However, they may not cover all expenses, and eligibility criteria apply. For more information on Government supports in aged care refer to the My Aged Care government portal.

How Home Equity Release Can Help

Home equity release products can provide the funds needed to cover these costs. Let’s explore how each product aligns with different aged care choices:

• Downsizing: This provides access to an immediate equity release which can help fund supports at your new smaller home whilst preserving the equity in the new property. Should this arrangement no longer be appropriate, you may be able to sell your new home and have sufficient equity remaining to fund a move into an aged care home.
• Reverse Mortgage: This allows you to borrow against your home to fund at home care whilst still living in your own home.  Should this arrangement no longer be appropriate, you may be able to sell your home, repay the accrued debts and have sufficient equity remaining to fund a move into an aged care home.
• Home Reversion: This allows you to sell a percentage of future sale proceeds in your home in return for equity released today. This can help fund at home care whilst still living in your own home. Should this arrangement no longer be appropriate, if you have retained a large enough % ownership in your home you may have the ability to sell it and use the remaining equity to fund a move into an aged care home.
• Life Estate: This allows you to sell your home to an investor whilst retaining ownership of it for life. It unlocks the maximum amount of equity helping you fund more at home care costs than other equity release options. Should this arrangement no longer be appropriate, you may rent out your property and use the income from it to contribute towards the costs of moving into an aged care home.

Making the right decisions around your aged care is critically important. We always encourage you to seek out professional advice to understand what government supports you could be eligible for and how your desired aged care can be sustainably funded.