The Australian aged care system is designed to support people in Australia as they get older, with extra assistance, either in their own home or at a residential aged care facility. However, it can be expensive for families, at an already stressful time.

Whether it’s easing the burden of residential aged care fees such as the refundable accommodation deposit (RAD) or the daily accommodation payment (DAP), or to pay for additional ongoing costs in residential aged care, our Aged Care Option (with a five year loan term) could help.

Obtaining a five year loan could provide extra time to decide what to do with the family home, or your residential investment property, and also even providing the opportunity to move back if able (and turning your loan into a standard reverse mortgage) – providing more option than just being forced to sell.

But what could this look like in practice, and is it possible to borrow the right amount to support your residential aged care needs?

Let’s look at an example from one of our customers Sue*, who used a Heartland Reverse Mortgage to help cover her aged care costs.

Sue’s case study

Sue owns a property in Melbourne valued at $1,220,000.

At 89 years old, she applied for the Heartland Reverse Mortgage Aged Care Option to cover the Refundable Accommodation Deposit (RAD) at an aged care facility she is entering for $450,000.

Sue also applied for a regular monthly advance of $4,075 for 2 years, totalling $97,800, to assist with ongoing care expenses. She also requested a cash reserve for the maximum amount available to her so she could apply for further funds to support coverage for any emergency medical costs or property maintenance that comes up in the future for the five years the loan can be held for.

Though Sue needed to enter aged care, to support her physically, she still was able to apply for the loan with Heartland herself, understood the requirements, and obtained independent legal advice from her chosen solicitor.

How much was she able to borrow?

89 (age) = 49% (maximum potential loan)

49% (LVR) x $1,220,000 (home value) = $597,800

Sue applied to borrow a total of $597,800, which meant Heartland could lend the requested $450,000 for aged care, $97,800 in regular advances, with $50,000 remaining for her cash reserve request, and the loan was approved as the application met Heartland’s credit criteria.

Want to know more? Find out more about using a reverse mortgage for residential aged care, or request your free Reverse Mortgage Guide. More information on aged care fees can be found here.

Ready to apply? You can now Apply Online, or request an Application Pack that provides everything you need to apply.

If you require any assistance, feel free to get in touch, we are here to help you.

*Names have been changed to protect the privacy of our customers.

Information provided is accurate as of 15 November 2023 and may change from time to time.