Permanently moving into aged care may trigger repayment under your loan agreement. You may need to sell the home or use other funds. Check the contract and model how much equity could remain for your accommodation and care.
Question
What happens if I have to move into aged care?
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Permanently moving into aged care may trigger repayment under your loan agreement. You may need to sell the home or use other funds. Check the contract and model how much equity could remain for your accommodation and care.
Permanently leaving the property may trigger repayment of the reverse mortgage.
This can create a difficult sequence:
- You need to leave the home.
- The reverse mortgage becomes repayable.
- The home may need to be sold.
- The remaining equity must contribute to your next accommodation and care arrangements.
The crucial issue is how much equity remains at that point.
Before borrowing, model the possibility that you move into care in five, 10 or 15 years. Consider the likely loan balance and how much of the property’s value might remain under conservative assumptions.
ASIC has specifically identified aged-care funding as an area borrowers may not consider adequately when taking out a reverse mortgage.
Read more: Are Reverse Mortgages a Scam? We ask Reddit users.
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Related questions
Sources
Useful tool: try our projection calculator with your own example figures.
Verified by the Reverse Loans editorial team.
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