Reverse Mortgages?

Discussion in 'Loans & Mortgage Brokers' started by Property Guts, 29th Jul, 2021.

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  1. Property Guts

    Property Guts Well-Known Member

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    One of my good mates is seeking help with this one...
    And i know this is the go to forum.

    My mates mum is 82 years old, single, living alone, but getting frail, uses a trolley to get around, can’t do stairs, doesn’t leave the house. She likes her home but is thinking about going into an Aged Care facility. My mate is wanting to get his mum a loan, for a Refundable Accommodation Deposit (RAD) to get her into Aged Care. In Sydney, that's about $750K to $1.5mill.

    The mum has good assets, Sydney house about $4mill + $400K ASX shares.
    Income of $70K p/a for life (the old duck did a great deal on exiting a business), No pension.
    There is a $650K existing loan on her house. If she moved out of the house, she could rent for, say net $50K p/a
    Say net income $120K p/a. Perhaps she could sell the house, but i think they are all too attached to it.

    My mates initial enquiries are...
    It will be tough to get a loan because of her age.
    But a reverse mortgage might be do-able.
    Is it correct only a few brokers do this?

    Clearly, we are all out of our depth.
    I think my mate needs a clear strategy on this.

    Is this what Aged Care advisors do?

    Anybody with experience in this area?
     
  2. moridog

    moridog Well-Known Member

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    There are specialist advisors around re aged care, not all aged care is the same, money ought not be the determining factor. Providers will be falling all over one another to offer a bed to a lady such as this and it will be very very pricey. She sounds like a lady who is not suffering cognitive impairment and using a wheely walker is not a great impediment to a "normal" life.
    I see people deteriorate quickly when moving into aged care, the glossy ads about ladies in pearls and twinsets having cups of tea with other dear old ladies is often not the case in aged care. It sounds like her level of function does not yet warrant aged care, your friend may wish to explore a live in companion, who is on site 24/7 but only actually "working" a normal day and has two days off. It would be cost effective when compared to a facility. Lots of older ladies around who live in genteel poverty who would be perfect for such a job.
    If your friend is also able to link Mum in with the local seniors group who do bus trips, bingo (don't mean to be stereotypical) etc, then, so much the better, otherwise ensure a carer or companion has a late model (or Mum buys) car which is easily accessible for Mum and is able to take her out for day trips or just a drive.
    I understand that, to lonely, older people, residential care sounds great when you are lonely and becoming frail, but, often it is a backwards step. If linked in with a home delivered meal option she may still be able to prepare meals of her choice, do what she wants, a whole range of things that she will not be able to do once in residential care, (despite what they say)

    Remember too, since Covid, facilities have become very, very bolshy about people getting in, claiming Covid protocols , they restrict visiting hours and actively discourage visitors. This leaves residents not less vulnerable but in fact, more vulnerable.

    Good luck to your friend.
     
  3. Lindsay_W

    Lindsay_W Well-Known Member

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    Not many lenders offer them, rates are high.
    Probably get around 35% LVR at her age so might not be enough depending on how much $ she needs for RAD
    I'd be considering selling the place given the kind of return expect if they were to hold it, might get better invested in something less involved?
     
    Rugrat and Property Guts like this.
  4. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Heartland would be a lender that would look at this.

    On the assumption that she's 100% not looking to sell.

    I've never heard of a specific broker that just deals with reverse mortgages, its just a matter if they have these lenders under their panel.
     
  5. Islay

    Islay Well-Known Member

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    You can look at Heritage, Greater Bank and there are probably others.
    I found it very hard to get clear and concise information about aged care when we needed to do something urgently a couple of years ago.
    There are specific financial advisors for this too. When you approach any of the care providers one of the pieces of paper they will give you is a list of advisors and their contact details.
    We were able to get advise from a Centrelink financial advisors but this may not be available to your friend??
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Speak to a specialist in nursing home advice - to avoid paying the bond she may just pay a higher accommodation fee ie it may jump from $6k/month with bond to $7k/month without.

    A reverse mortgage rarely makes sense.
     
  7. tedjamvor

    tedjamvor Well-Known Member

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    This is well outside my area of expertise but it doesn't sound like mum needs to live in aged care, she just needs a more suitable house (ie everything on the ground floor).

    As for paying for aged care, I would want to be well on top of knowing what that will be before going into it (including assessing whether it's worth moving around assets). There is also home care packages which are becoming more popular with COVID forcing the govs hand. She may be eligible for a lower level package now or soon.

    Imo much better to stay in the community and the home as long as possible, but each situation varies so ymmv.
     
    Joynz likes this.
  8. Joynz

    Joynz Well-Known Member

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    Yes - its a bit unclear what Mum wants and how she wants to live. That should be the focus.
     
  9. Rimana

    Rimana New Member

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    If Mum wants to continue living at her home independently, explore home care package program. As Mum doesn't receive full pension, she will have to pay pay an Income tested fee. Before home care package, she might (should, based on your information) be eligible for Commonwealth Home Support program. Includes cleaning, transport, nursing, meals provision, social support, aids and equipment, minor home modifications (rails, etc).
    Let me know if you need more information.