Government considers new equity release scheme
The Australian government is considering a new reverse mortgage scheme that would allow elderly Australians to pay for their care without getting rid of their family home.
Reform to equity release in Australia was a key recommendation in the Productivity Commission's report into funding care and would allow properties to be handed over gradually, providing the homeowner with a regular income.
Aged care minister Mark Butler said: "The priority for us is to make sure people have choices."
He added: "We are committed to a system that is fair for those being cared for as well as for the rest of society, is financially sustainable and that provides high quality care."
An alternative to introducing reverse mortgages – and a more likely solution to the care bill problem – would be a government-backed low interest scheme.
Reverse mortgages are currently available to Australian property owners, but they are relatively uncommon. The Productivity Commission hopes that their widespread introduction would be coupled with stipulations that the money raised is only used to pay for care – not for holidays or discretionary spending.
The Senior Australians Equity Release organisation (Sequal) believes that such schemes would help bridge the savings shortfall that many people experience in later life.