Residents of residental aged care may be asked to pay a daily accommodation fee to help cover some of the costs of aged care.
This fee is generally calculated on a case-by-case basis. A resident can choose the method to pay the fee based on the following options:
1. Pay the entire fee as a lump sum - known as a RAD (rufundable accommodation deposit)
2. Pay the fee by instalments - known as a DAP (daily accommodation payments)
3. Pay the fee by a combination of lump sum and instalments (a combination of RAD & DAP)
Click here to find out more about the RAD and DAP in residential aged care.
Increasingly, some residents or their representatives want to consider the option of retaining their home.
This option is potentially suitable in cases where the aged care fees are paid in part and/or paid by instalments. If some or all of the fee is paid by instalments, interest is payable on the unpaid balance.
This rate is set for the duration of instalment payments and will impact available cash flow. If a person's home is retained and they utilise the 2nd and 3rd options above, and they rent out their former principal home, the rental income will be exempt from the Centrelink income test. The rental income is taxable however.
The value of the home in these circumstances will also be exempt as an asset for Centrelink/DVA pension purposes. There may also be an opportunity for a resident to consider the use of a reverse mortgage to fund the lump sum component of their accommodation bond.
A reverse mortgage is a loan secured against your home that allows you to tap into the equity of your home. A person may get access to that equity either as a lump sum or have the ability to drawdown on the loan on a regular basis.
However, most reverse mortgage providers in Australia stipulate that a person must continue to reside in their home if they wish to use the product. Therefore, the use of reverse mortgages to fund residential aged care in the current market is quite limited.
If you decide that selling the family home is the best option for you, find out more about selling the family home for entry into aged care.
Search for residential aged care in:
- Residential aged care in Melbourne
- Residential aged care in Sydney
- Residential aged care in Canberra
- Residential aged care in Brisbane
- Residential aged care in Adelaide
- Residential aged care in Perth
- Residential aged care in Hobart
Search for home care services in:
- Home care in Melbourne
- Home care in Sydney
- Home care in Canberra
- Home care in Brisbane
- Home care in Adelaide
- Home care in Perth
- Home care in Hobart
Need help finding aged care?
Our free aged care concierge and comparison service will help you find the best options tailored to your needs. Get a personalised shortlist, completely free, and make informed decisions with confidence.
Call 1300 197 230
Article posted:Jun 14, 2019 Category: Aged care financial planning
Ipswich war veteran to pay tribute on ANZAC Day
ANZAC Day is a special time of reflection for Ipswich man and Carinity resident, Doug Young; a chance to honour defence service veterans including his brother. Doug and his identical twin brother, Allan, enlisted in the Royal Australian Air Force in 1953, when they were teenagers.
Margaret at 90: Living Life Her Way at Mayflower Brighton
Margaret has always lived life on her own terms, and turning 90 hasn’t changed that one bit. As she celebrated her milestone birthday at Mayflower Brighton, surrounded by loved ones, laughter and joy filled the air. A special cake was prepared, and Margaret, true to form, made sure to enjoy an extra scoop of her favourite ice cream.
Belvedere Aged Care Celebrates Family and Friendships
On Friday, 11 April 2025, Belvedere Aged Care celebrated its residents and their multigenerational ties that bring joy and lasting memories. As Easter approaches, it was the perfect opportunity to bring together grandchildren of all ages, along with parents and grandparents, for an afternoon of live entertainment, delicious food, and Easter-themed fun in the surrounds of Belvedere’s gardens and newly renovated dining hall.
Couples Rooms at Infinite Care: Ageing Together in Residential Care
Infinite Care love’s love—family love, friendship love, and that “can’t-live-without-you” kind of love. There is something magical about a romance that stands the test of time, weathering life’s storms, the ups, and the downs. The team at Infinite Care understands that as you grow older, your love might evolve, but the need for closeness, connection, and someone to confide in never goes away.