To keep or sell the family home is a very personal decision and sometimes the best financial outcome may not suit the family - so you should not feel pressurised to keep or sell the home.
If you do decide to keep the family home, then the amount you need to borrow for the room has to be considered.
Lump sum RAD's (bonds) are usually hundreds of thousands of dollars. If you do not have enough savings to pay the RAD off, you can pay the DAP (aged care term for interest). The periodic interest rate is set by the government and is quite high. You may have a substantial deficit, where your income will not cover your aged care invoices. So, you need to be very careful on how you manage this situation. If you do decide to rent the home, the Government introduced significant changes for all new residents entering aged care from January 1, 2017, which could impact on your Centrelink or DVA pension. After two years the home will count as an asset.
If you decide to go to a third party lender, then the compounding interest and fees can be significant over just a couple of years. Often the family home is in disrepair and may not be rentable without spending a lot of money. Some family members may also have had bad experiences with tenants and do not wish to worry about a rental property. If these are concerning issues, then sale of the home may just be the best for the family.
Prior to making such a large financial transaction such as selling the family home, you should know the implication on your Centrelink/DVA payments and the means tested care fee.
PrimeCare Financial Planning will ensure that you do not make a costly financial mistake, which can have significant implications on the longevity of your loved ones capital.
Call PrimeCare today on 1300 853 875 your Aged Care Specialists!
