Many people moving into aged care choose to either sell or rent their former home to help pay their fees, in particular the large upfront Residential Accommodation Deposit.
But now, more than even, may be a very difficult time to sell the family home. Social distancing rules have stopped auctions and open houses. Job uncertainty is likely to make many potential buyers nervous about committing to a property purchase, and banks may be nervous about lending also. Rents may also be lower than expected as tenants who lose jobs may be looking to negotiate lower rent arrangements.
This may be of high concern not only people who have recently moved into care (or are about to make the move) but also those who moved in about two years ago and are about to lose age pension exemptions for the home.
Advice from a real estate agent to evaluate the market will be important, as well as financial advice from a financial planner accredited to give aged care advice on other options for managing cash flow, such as:
- Paying a portion of the accommodation payment as a lump sum (called a refundable accommodation deposit or RAD) and asking the provider to take other fees out of this amount; or
- Accessing the Pension Loan Scheme to borrow some of the equity from your home as increased cash flow, at least until the property market picks up; or
- Looking to see if financial hardship rules can give some relief if properties aren’t selling.
If you’d like to look into your options, please don’t hesitate to give us a call to see how we can assist in your circumstances.