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Government may support reverse mortgages

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Australian Broker | 12 Apr 2011, 06:00 AM Agree 0
Reverse mortgages may see government support as Australia’s population ages, a reverse mortgage broker has predicted
  • Twiggy | 12 Apr 2011, 12:58 PM Agree 0
    The Productivity Commission's draft report into "Caring for Older Australians" evaluated the funding of aged care, considered insurance policies and long-term savings accounts, and finally recommended Reverse Mortgages, It is estimated only $120m out of the $11b Accommodation Bond industry is currently funded by Equity Release. Stage 2 of the NCCP will have to include the use of Equity Release with aged care when considering legislation. ASIC's RG209 seeks additional protection for senior borrowers and the requirement for "knowing your client" may make face-to-face interviews as mandatory. Other considerations may include banning the use of funds for buying/investing in other financial products.
    The cost of care is fundamental to the PC's recommendation and "user co-contribution" is seen as necessary in improving and maintaining aged care, either in Residential Care or at Home. And this is the same response given by the UK Government's current enquiry into aged care.
    Specialised third party distribution in Equity Release will also need to understanding options and policies within Centrelink guidelines to optimise aged pension entitlements.
    Paul Dwyer
    Melbourne and Peninsula Reverse Mortgages
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