As we see further enhancements in home care, there is acknowledgement for those receiving care will be required to make greater contributions to their costs.
The Home Care Program (HCP) offering CDC (consumer directed care) to older Australians will have a cap on the maximum amount of subsidised services. For recipients looking for a higher level of services, they will need to make an additional contribution to the cost themselves.
Commencing 1st July this year, The Commonwealth Home Support Program (CHSP) for all states except WA and Vic is also asking for greater contribution for the services provided.
In recognition of the importance of Home Equity Release as an option for funding residential care or care at home, the My Aged Care website is providing an introductory explanation of Home Equity Release, with a further upgrade after 1st July.
For many older Australians, their understanding of a reverse mortgage is often misguided by incorrect statements by seniors groups and other commentators, although it offers more consumer protections than any other home loan in Australia.
There is a maximum loan amount of 45% of the value of the family, albeit at the age of 85, and all loans have the mandatory “no negative equity guarantee”, whereby the loan to be repaid can be no greater than the sale value of the security.
Each borrower must receive a projection of how their equity release will affect the future net value of their home, and for further peace of mind, all borrowers must obtain independent legal advice of their choice. This provides a great opportunity to update Wills or make Enduring Powers of Attorney.
The limitation of both HCP and CHSP is that many of the more expensive costs whilst remaining independent at home are not funded.
For the many hundreds of assessors visiting older Australians in their homes, they will see many instances of potential unsafe conditions which may affect those residents in their frailer years.
In 2011, The Victorian Department of Human Services released a study of over 50,000 inspections of older residents’ homes and found 31% has “slip and trip” faults, whilst 23% were suffering electrical faults. In addition, cracking, timber rot, roof and drainage faults were found in 10% or more of homes.
Repairs and maintenance to the family home is often overlooked by retirees when their retirement income falls well below the level that they received when in paid employment.
Receiving advice on reverse mortgages is not available from financial advisers unless they have another licence in the form of a Credit Licence. It seems the legislative regime makes it difficult for older Australians to understand where to obtain the right advice.
Once again not all Credit Advisers are accredited to discuss reverse mortgage enquiries. The national association for Equity Release is SEQUAL, who has specially accredited Advisers skilled in this product, and who are able to discuss all of the options to fund independent living at home.
Advisers providing assistance will always encourage consumers to access only what they want at a specific time, therefore minimising the cost of credit and maximising the future net equity.
Paul Dwyer is an Accredited Aged Care ProfessionalTM and also a Credit Adviser specialising in aged care.