Seeking a decent Australian reverse mortgage provider

November 30, 2018 9:00 PM

I have recently been given financial power of attorney by an elderly friend whose expenditure on in-home nursing is now considerably greater than her income. Her only substantial asset is her home, and she's asked me to arrange a reverse mortgage. Which Australian providers should I be talking to first? Possibly more importantly, which providers should I not be talking to under any circumstances?
posted by flabdablet to Work & Money (11 answers total)

Please forgive the presumption if these points aren't true of the Australian system (I don't quite have the time to do definitive research), but they are so often not understood beforehand in the American system in a way that leads to near-tragedy that I would feel bad if I didn't say anything:

(1) In the American system, you still must pay property taxes and insurance. Since apparently all her income is being eaten up by health care, any plan for drawing down equity must include a substantial set-aside for such. Do not rely on the lender to do the math for you.

(2) In the American system, at least one borrower must use the property as a primary residence. If this person's health is so poor that she anticipates having to move to some sort of care facility in the relatively near future, that means the reverse mortgage will be foreclosed on relatively soon. In such circumstances, she may be better off selling the house up front, as reverse mortgages are quite an expensive way to access the equity in the house. (Of course, it's understandable that she would want to remain in her home as long as possible, but some realism may be necessary here, as it sounds as if she needs to maximize what she gets out of the property. At least, the math should be done.)

This article looks particularly grim but seems to indicate that the problems I've mentioned are shared with the Australian system.
posted by praemunire at 9:26 PM on November 30, 2018 [2 favorites]

This ASIC website provides legitimate and unbiased general information.

Current thinking is that all reverse mortgages stink. Check out this Whirlpool forum thread.

I reckon you have already done some of this research, flabdablet. I wouldn't blame you if the responsibility feels a little overwhelming. Are you the closest person to this friend? Makes it even harder.
posted by Thella at 10:01 PM on November 30, 2018 [1 favorite]

Are they reluctant to go into a nursing home, or are they just trying to delay the inevitable? They may be financially more secure if they sell and move now, rather than later. However, I can understand if nursing home care scares them. Have you spoken to their local council about available support? Have they had an aged care assessment done?

You're a good man for doing this. All the best.
posted by Thella at 10:04 PM on November 30, 2018 [2 favorites]

Kudos to your friend for wanting to stay in her own home for as long as she can. Most nursing homes in Australia are soul-destroying and phenomenally expensive.

This article from the Sydney Morning Herald provides some valuable information.

If your friend's only asset is the family home, then I assume that she is in receipt of a the full pension. If so, she won't be able to take advantage of the Government's Pension Loans Scheme until 1 July next year, at which time she will be able to reverse mortgage the house to receive an additional 50% over the amount of the full pension. If she is not presently receiving the full pension, then she could access the scheme now to top-up her pension payments to the full pension.

The article says that one of the dangers of a reverse mortgage from a private provider is that the income stream is considered assessable income, and may affect your friend's continuing entitlement to the pension (or to a full pension), so be aware of that.

You might want to seek advice from a member of the Aged Care Gurus network.

Finally, the article mentions the Government's Aged Care Assessment Scheme, which provides subsidised in-home care. Is this possibly an option for your friend? (more info here).
posted by Tawita at 10:07 PM on November 30, 2018 [2 favorites]

Response by poster: Clarification: despite endless advice from concerned friends, she's made it completely clear that moving out of her home is off the table for as long as she retains the ability to make informed decisions, which she shows no sign of being about to do any time soon; her brain is about the only part of her body that isn't failing her. She has complex medical and nutritional issues that experience has repeatedly taught her will not be taken appropriately seriously by institutional nursing staff. She's not ready to die just yet, but she doesn't expect to see 2020 and has been consistently adamant that when she does die it will happen in her own home. She has no surviving relatives.

You might want to seek advice from a member of the Aged Care Gurus network.

What's been your experience with the quality of their advice?
posted by flabdablet at 10:49 PM on November 30, 2018 [1 favorite]

What's been your experience with the quality of their advice?

I've had no personal experience with them, but Noel Whittaker has an impressive reputation as a financial adviser.
posted by Tawita at 11:11 PM on November 30, 2018 [1 favorite]

I don't know much about reverse mortgages, but in terms of making use of the resources available, be sure to make as much use as possible of the home assistance provided via the MyAgedCare service (government funded home aged care service packages available) and also if there is a clear life-limiting diagnosis and she is expected to live <12 months public hospital community palliative care services may be available to provide some home visits and advice regarding management. No community nursing package is going to be a substitute for long-shift private nursing, but as much as possible you need to affray those costs because 12 months of private nursing is going to be a similar cost to most houses.
posted by chiquitita at 4:07 AM on December 1, 2018

Response by poster: Further clarification: I appreciate the kindness that motivates suggestions about various forms of public assistance, but please extend both of us the courtesy of taking it as read that such assistance as is available is already in place but simply proving inadequate to meet her present needs.

The council cleaners and district nurses and her visiting doctor are all lovely people, but her present mobility is restricted enough that she needs somebody to help her get ready for bed and physically into it every night without fail, and none of the public options will run to that.

She has in fact been relying on those options for several years and is well familiar with them, but has recently needed to pay for private nursing in addition to what's available publicly. The cost of that has risen sharply since returning from hospital after a crisis that would not have happened had she had adequate in-home care in the first place.

During the hospital stay her health went backwards in at least as many ways as it went forwards, as has happened every time she has been prevented from preparing her own meals in her own kitchen and sleeping in her own bed surrounded by her own things, and the driving force behind this question is the need to gain access to enough income to pay whatever it takes to ensure that no similar crisis happens again.

So thanks again for your kind words, but this question is specifically about the reliability or otherwise of Australian reverse mortgage providers, not about aged care in general.
posted by flabdablet at 6:13 AM on December 1, 2018 [1 favorite]

Heartland Seniors reverse mortgage is recommended by Canstar. They're a subsidiary of a NZ bank. They specialise in reverse mortgages and have a pretty good reputation in the industry. They also allow the loan to continue if the borrower has to move into aged care.
posted by Kris10_b at 6:24 AM on December 1, 2018

Response by poster: I'd found that recommendation via the googles as well, but I know nothing about Canstar. Anybody got a good reason to trust them?
posted by flabdablet at 7:08 AM on December 1, 2018

Canstar is legit,it's kind of like Choice for financial products (though they've branched out a little in recent years). Which is to say, it's not the be all and end all, but they don't recommend total shit, and it's not like iChoice which only shows you vendors who pay to be on it etc.
posted by smoke at 1:22 PM on December 1, 2018 [1 favorite]