As you and your loved ones get older, you might need long-term care or aged care services. In Australia, these services can cost you a lot of money, and you might worry about selling your home to cover the expenses. But there are ways to avoid this. In this blog, we’ll talk about some simple things you can do to make sure you can get the care you need without selling your home.
Do you need to sell your home to pay for care in Australia?
You don’t have to sell your home to pay for nursing home fees. Your home belongs to you, and you shouldn’t feel pressured to sell it. It’s better to keep your home when you move into aged care, especially if your loved ones will still live there.
However, nursing home costs can be high, and sometimes selling the home might be the only choice if you don’t have enough money from other sources.
Also read: How Much Does Aged Care Cost In Australia?
How can you avoid selling your home to pay for aged care?
There are various ways to avoid selling the family home to pay for aged care in Australia. Selling your house is a big deal financially and can affect how much you pay for aged care and any pension you receive.
Sell other available assets
Your home can help you pay less for aged care and get a higher age pension. So, it’s better to use other assets, such as your bank savings, stocks, or retirement savings, to cover aged care costs before you think about selling your home.
Spend less on the Refundable Accommodation Deposit (RAD)
When you move into a nursing home, they might ask you to pay a big lump sum called a Refundable Accommodation Deposit (RAD). They might even say you have to pay it all at once, but that’s not true.
Besides the RAD, there are other fees you have to pay every month, like the basic daily fee, means-tested care fee, and additional services fee.
Different nursing homes will ask for different RAD amounts, ranging from about $300,000 to over $1 million, depending on how good the nursing home is.
Here’s something a lot of people don’t know: you don’t have to pay the whole RAD amount. In fact, you don’t have to pay anything upfront if you don’t want to. You could choose to pay nothing when you move in and then pay some of it later if you want. But if you leave any of the RAD unpaid, you’ll have to pay interest on it.
Seek financial advice
Deciding to sell your family home is a big deal. There’s a lot to think about, and it can get complicated. That’s why it’s smart to talk to a financial advisor who knows about this stuff. Usually, selling a home isn’t just up to one person. Different people in the family might have their own thoughts and feelings about it. Getting advice from someone who isn’t directly involved can help everyone figure out the best thing to do.
Consider borrowing funds from family
Many people keep their family home, especially if their spouse won’t live in it anymore, because they want their children to inherit it. This might be because of sentimental reasons or because it’s valuable.
If you’re keeping the home for your family’s sake, you could think about borrowing money from them to help pay for aged care. But be careful because borrowing money from family or relatives can cause problems with estate planning, family arguments, or making more of your assets count for Centrelink and aged care assessments. Thus, it’s better to talk to a financial advisor or lawyer for advice in this situation.
Use your home to borrow money
From our experience, most people moving into aged care own their homes outright. That means you might be able to get a reverse mortgage or use the Government’s Home Equity Access Scheme.
With a reverse mortgage, you can borrow money against the value of your home. This can provide you with the cash you need to cover aged care costs without selling your home.
But there are risks with reverse mortgages, so it’s important to know what you’re getting into before you decide. Thus, it’s better to talk to a professional for financial advice before making any decisions.
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Move into a different aged care home
You might be feeling stressed about having to sell your home because the nursing home you picked has a high Refundable Accommodation Deposit (RAD) and extra service fees. Don’t worry; you have other choices, including finding a new home care provider.
Understanding the home care package pricing can also help you explore alternative options for financing your care needs. Look for a care home with a lower RAD amount and fewer extra service fees. This way, you might not have to sell your home to pay for aged care.
Minimise the countable assets and income
There are many ways to organise your money and possessions to make them look better on Centrelink and aged care assessments. This can help lower the cost of aged care and might even increase your Age Pension or DVA payments.
By arranging your money and things more smartly, you might not have to sell your house to pay for care home fees.
Should you sell your house to pay for aged care?
The answer is no. You can handle this situation by using various ways. Instead of selling your home, you can consider using your savings, finding ways to cut down on care costs, borrowing from family or relatives, smartly using your home’s value or getting advice from a financial expert who can help you make the right choices for your situation.
Your home is more than just a property—it’s a place of comfort and security. Thus, it’s really important to take your time and think carefully before deciding whether to keep or sell your home. Rushing into a decision could lead to regrets later.
At Wise Choice, we understand the weight of this decision. Many individuals opt to sell their homes to cover care expenses without exploring alternative options or seeking professional guidance. However, this can result in unforeseen financial consequences, including higher aged care fees, reduced pension payments, and the loss of a cherished home. That’s why it’s crucial to get advice from a financial expert who can help you make the right choices for your situation.
Contact us today to learn more about our in-home care services and how we can assist you in making the best choice for the aging journey.
