Aged care financing is set to “dramatically increase” in the coming years as the population ages, according to Cory Bannister, vice president and chief lending officer at La Trobe Financial.
La Trobe is one of three specialist lenders now offering an option designed to fund the payment of the Refundable Accommodation Deposit (RAD), along with Macquarie Bank and Heartland Seniors Finance.
They have introduced their Aged Care Loan, which lends up to 50 per cent LVR against the borrower’s main residence and allows interest to be accrued for part of the loan life.
The average RAD is currently $320,000, but in some suburbs of Sydney and Melbourne, it can easily top $1M, which many families can find difficult to finance.
Mr Bannister added that for brokers, their client is usually 45 to 65 and “the person who is appointed the Enduring Power of Attorney.”
Don Swanborough (pictured), senior aged care adviser at Affinity Wealth Services, puts the increase in loans down to our buoyant real estate market. “People are doing their sums and if they pay the RAD, they’re going to get no interest on it,” he says. “It’s better for them to keep the family home.”
With the cost of moving into aged care valued at $3B a year, he says they are popular with aged care providers too. “They get to have a lump sum as the RAD and a lot of facilities are looking for that. They can refer their clients onto someone like us to make sure people understand what they’re getting themselves into.”
