Reverse Mortgage Specialist Peter Bolitho

30/03/2020

Reverse Mortgage and Age Pension Entitlements

Many older Australians value their age pension payments. For the majority of recipients, the use of a reverse mortgage will have no effect on current entitlements.
Each age pension recipient is assessed on both their assets and income to determine their pension payment.

Maximum assets for Full pension
From 20 March 2020, pensions reduce when your assets are more the limit for your situation.
Your situation Homeowner Non-homeowner
Single $263,250 $473,750
Couple, combined $394,500 $605,000


Maximum assets for Part pensions

From 20 March 2020, part pensions cancel when your assets are more than the limit for your situation.
Your situation Homeowner Non-homeowner
Single $578,250 $788,750
Couple, combined $869,500 $1,080,000


With a Reverse Mortgage, up to $40,000 is exempt from the assets test for up to 90 days, so the money needs to be spent within this time limit to avoid it becoming an assessable asset.

If $50,000 is used for home repairs/maintenance on the principle place of residence, (an exempt asset), the monies spent will not be included as an asset. If the $50,000 is to pay for a new car, the value of that car then becomes a non-deemed asset.

Advisers are required to have a discussion with potential borrowers about future needs and many discussions lead to having a Line of Credit structure into the loan facility to meet any future needs, if and when they may occur. From an age pension perspective, it is important to know that a Line of Credit is not regarded as an asset.

Assessable income on financial assets

The Government has amended deeming rates from 1st May 2020.

Situation Deeming rate
Single Lower rate: 0.25% on the first $51,800 of your investment assets, plus
Upper rate: 2.25% on your investment assets over the amount of $51,800

Couple Lower rate: 0.25% on the first $86,200 of your combined investment assets, plus
Upper rate: 2.25% on your investment assets over the amount of $86,200

Gifting

Centrelink will assess any gifting amounts over $10,000 in one year, or $30,000 over 5 years. Amounts over these limits will be deemed. If a single person has no other assessable assets, it could be possible to use a reverse mortgage for gifting purposes of around $190,000, without affecting age pension entitlements.

Centrelink is the ultimate source for determining age pension entitlements , but an adviser from RMFS will assist potential borrowers with basic information about their qualifications.

It is important to ensure age pension recipients regularly update their information with Centrelink. In the first 3 months of 2020, our advisers have met 3 clients whose details have not been updated to reflect their circumstances, and have missed out on between $16,000 and $30,000 over the past 3 years.

Are you eligible for the full age pension.
From 20th March 2020, the full age pension is $944.30 p/f for a single and $711.80 each per couple.

We recommend recipients check their payments to reflect their current asset and income position.

23/03/2020

Over the past few weeks, we have been seeing more advertisements for Reverse Mortgage Loans on Facebook. All of those advertisers direct your enquiry to their Call Centre, staffed by people whose knowledge comes from a script!

My 20+ years of assisting Queenslanders with their Retirement Finances tells me you cannot rely on over the phone (or emailed) advice.

Every person's situation is different and deserves a personal discussion about the best options to resolve those situations.

If you would like a FREE, 'face to face' discussion (over Skype or Face-timeI) email me at [email protected] and I will contact you to arrange a suitable time for us to 'meet'.

Don't rely on faceless Call Centre staff whose knowledge comes from a script.

Over the past 20 years, I have helped many hundreds or Queenslands to enjoy a better retirement, by sorting out their finances and providing funds to meet immediate needs and future possible expenses.

I have come across virtually every situation - from people simply wanting to repay their credit card and/or mortgage debts; to people wanting to help their children with a 'warm hand'; to people wanting to renovate their home and provide for possible future Aged Care expenses.

Send me an email or a message and we can have arrange a free on-line chat about how you can regain control of your finances and enjoy some peace of mind in your retirement years. I look forward to talking with you soon.😀

07/11/2017

This is an article from a UK mortgage industry magazine HOWEVER we see many Australian seniors in similar situations as they struggle to meet increasing cost of living expenses on a fixed income.

35% use equity release to clear debt
Category: Equity Release

Updated: 06/11/2017
First Published: 06/11/2017

While many may consider equity release as a loan that can give you something extra – an extra special holiday, extra spending money for retirement or extra funds for home improvement – new data reveals that people are increasingly using it to pay off their debts instead.

Specifically, the figures from Retirement Advantage show that 35% of their customers used equity release to clear an existing mortgage and/or consolidate unsecured debts in the third quarter of 2016. And this figure isn't likely to go down.

"Carrying residual mortgage debt into retirement is on the rise," said Alice Watson, head of Marketing at Retirement Advantage Equity Release. Not only are people buying houses later in life, with house prices at historic highs this also means more mortgage debt that will take longer to pay off, not to mention the added burden of student loans which future generations of retirees will have to deal with.

"What's encouraging though is that our customers are taking a holistic view of all their assets, and using property alongside pensions and other savings," Alice continued, and we agree. While it's important to take part in your workplace pension and make sure you save as much as you can, don't forget about the value of property.

A house can be much more than a cherished family home and an inheritance for your (grand)children, if you're smart about it and seek advice. Indeed, 25% of customers were still found to use equity release for home and garden improvements, while 5% even used it to buy a new property, which can be a great investment for the future.

However, the fact that people are finding it harder and harder to pay off their mortgage could cause problems down the line. That's why, especially with mortgage rates on the rise, it's important to make sure you have a competitive mortgage deal now, so you can become mortgage-free earlier and easier.

"The good news is that with careful planning and financial advice, the options available can be assessed at an early stage," concluded Alice. "This will give people the tools to proactively manage debts while also enjoying the retirement they want."

What next?
If you're all sorted to enjoy your retirement debt-free, but would like a boost to your retirement income or for the holiday of a lifetime, consider talking to an equity release adviser.

10/04/2017

YOU CAN RECEIVE A CONSTANT INCOME FROM YOUR INVESTMENTS!

(Read this article and then send it to your Financial Planner.)

Most people who rely on investments for their retirement income suffer from varying levels of investment returns, resulting in fluctuating levels of income.
For example, a couple with $30,000 in the bank and $600,000 invested in Australian Shares may have earnt $118,200 in 2013 and seen that figure plunge to $22,800 in 2015! (All Ordinaries Index yearly return – 2013 Av. 19.7% – 2015 Av 3.8%– source *Market Index Australian Sharemarket Historical Returns Report).
That same couple will also experience a significant reduction in the part pension eligibility as a result of the changes to the Pension Asset Thresholds, effective 01/01/2017.
An easy way for investors to maintain a constant level of income during their retirement is to establish a Stand-By Reverse Mortgage loan. In the above example the average annual return on Australian shares in 2013 was 19.7% whilst in 2015, it was only 3.8%
By using a Stand-By Reverse Mortgage loan, you and your Financial Planner can identify a minimum level of return you need to maintain your lifestyle. For example, if the above couple established 7% p.a. as a minimum level of return, this equates to an income of $42,000 p.a.
In the 2015 year, they would have earned $22,800.00 – a shortfall of $19,200! Using a Stand-By Reverse Mortgage loan, they would have drawn this amount from their Stand-By Reverse Mortgage loan.
In the 2013 year, they would have earned $118,200. They would have retained their $42,000 annual income and paid the balance into their Stand-By Reverse Mortgage loan, to offset any amounts drawn in previous years. Because 2013 was such a strong year, they may have drawn some of the surplus funds and gone on a trip or upgraded their car etc.
The Stand-By Reverse Mortgage loan can be drawn against at any time, for any purpose and repayments of any amount can be made at any time, without penalty.
These features make it an excellent tool for retirees to have in the background of their retirement strategy, to make up any shortfall in annual investment incomes and also, to replace the need for them to maintain large cash reserves.
Reverse Mortgage Finance Solutions are specialist Equity Release Credit Advisors and can assist your Financial Planner to establish a Stand-By Reverse Mortgage loan to underwrite your annual income levels and provide access to extra cash, as and when required.
Go to our web-site for contact details for your local, State based advisor. www.reversemortgagefinancesolutions.com.au or contact us on 1800 001 020
*Historical returns are based on the All Ordinaries Accumulation Index (XAOA) which includes dividends
Peter Bolitho. Director – Seniors Equity Release Australia; Reverse Mortgage Credit Advisor.

05/03/2017

Editor, Investment magazine

05/03/2017

Interesting article about the pension

There’s a new push to set up an independent tribunal to oversee pension increases.

05/02/2015

Don’t let Aged Care Fees Consume the Family Estate!

Significant changes to aged care funding rules in July 2014 means that aged care fees and charges could well consume the value of the family estate. Prior to June 30 2014, only the income of the person entering aged care accommodation was means tested; HOWEVER post July 1st, Income and Assets are now means tested to determine the contribution new entrants to aged care are capable of making towards the cost of their care.

Importantly, the value of the family home is now assessed as part of that means test! The decision whether to keep or sell the family has become even more important. If the home is sold, the full proceeds of the sale will be included in the asset assessment. By deciding not to sell the home, its value for the “means tested care fee” is only assessed as a nominal $155,823, whether the actual value is $300,000 or $3million.

In a typical situation, the difference in the means tested fee can be a great as $33.93 a day OR $12,384.45 p.a.

Other financial assets are also included in the assessment and they are deemed to earn interest at the “deeming rate”, further increasing the Daily Means Tested Fee.

“Nursing Home Accommodation Payments on the Sunshine Coast range from $250,000 up to $550,000 and sometimes higher, where special dispensations have been obtained by the Care Provider,” said Peter Bolitho, a specialist Aged Care adviser from Aged Care Financial Solutions. “It is important to look at using other liquid assets like cash at bank, as monies used towards contributing to the lump sum payment are not included in aged pension assessment.”

“This may allow some self-funded retirees to suddenly be eligible for aged pension entitlements” he said.

One of the more effective means of minimising fees and maximising the end value of the family estate is to use the home as security for borrowing an amount to pay the Accommodation Payment. New loan products are now available specifically for this purpose.

Mr. Bolitho added “the Accommodation Payment can be structured so the family home can be rented. Rental monies are not included as income in aged pension or care fees calculations, as long as part of the accommodation payment is paid by instalments (The Daily Accommodation Payment). In most instances, retirement incomes plus the rental income from the family home meets all costs, including interest on any loan used to pay the lump sum accommodation payment. (The Refundable Accommodation Deposit)

The loan principal amount is repaid via the Government Guarantee that all upfront accommodation payments are fully refundable to the estate of the care resident.

08/10/2014

Reverse Mortgage saves Betty’s Home!
Recently, we received a call from ‘Betty’ (not her real name), who was wanting to arrange a meeting with our adviser ‘as soon as possible!’ Betty was quite agitated on the phone, so we arranged the meeting for that afternoon, at her home in Regional Queensland.
We asked Betty for a little detail about her-self; her home and the purpose that she needed the loan for. Betty was a widowed pensioner who had spent all of her savings on trying to help out her daughter, who had been suddenly widowed by the death of her husband in England. Betty had helped her daughter sort out her husband’s estate and for her and her grand-son to relocate to Queensland, to be near to Betty.
Unfortunately, whilst all this was happening (approximately 3 years ago), Betty let her Council Rates get in arrears and has not been able to catch up with her payments! As Betty told us, she can keep up with her week to week expenses, HOWEVER all her focus and money was being directed to helping her Daughter and Grand-son to relocate to Australia,
Before finishing her phone call, we told Betty not to worry as we were sure we could arrange a Reverse Mortgage loan to help her out. When we arrived at Betty’s home that afternoon, she told us she felt like ‘a great weight had been lifted off her chest’ since speaking with us on the phone that morning.
As it turned out, things were a little more serious than we first imagined, as Betty had received a letter from her local Council, advising that unless the full amount of the rates arrears (more than $7,000.00) was paid within a couple of weeks, The Council were going to Auction her house to recover the debt! No wonder she was concerned and anxious!
We applied for the loan to clear the rates debt, plus a credit card and small loan ‘her bank’’ had arranged to help her out. Betty had asked at her bank about any possible way to pay the rates arrears, but her Bank told her there was no way that any bank could help her! – So much for customer service!
We also arranged with Betty for us to ring the Council and advise them that the arrears were to be paid out of the loan. We did that and arranged for the rates arrears to be paid direct to the Council.
So Betty is now able to keep her home and has no rates arrears hanging over her head; as well as NO on-going monthly loan repayments or credit card repayments to worry about! Betty is about $80.00 per fortnight better off and she no longer has to worry about losing her home. We arranged for reserve funds in her loan to be available to pay her future rates payments and any other major expenses.
If you know any-one in similar circumstances to Betty, please suggest they give us a call. Or if you just like the good news aspect of our storey, why not share it on face-book or twitter.
It’s not every day you read a good news storey with such a happy ending!

11/12/2013

New Equity Release Accommodation Bond Loans - New Trading Name - Aged Care Finance Solutions (Q'ld)

“Do we have to sell the Family Home?”

This is a question many advisors are asked when families are considering residential aged care. Selling the family home can be stressful for both the owner and the family. The option to keep the home can reduce adverse results arising from hasty decisions, and minimise the emotional aspect of entering residential care.

We have the answer

This month we have introduced two new credit products that provide the funding to pay for aged care by using the equity in the family home. Credit laws require us to meet ‘face to face’ with clients to provide all of the options to family members and offer them the answer in keeping the family home. This gives families the comfort in knowing aged care payments can be made.

When a decision is taken to use the equity in the family home, we are able to provide that funding to the aged care provider within 4-5 weeks of application. This is more advantageous to care providers as selling the family home can take 4-6 months or longer.

What we offer

1. We are Queensland’s only specialist Aged Care Credit Adviser operating under our own ASIC approved Australian Credit Licence.
2. We have 16 years’ experience specialising in Equity Release and Aged Care Credit
3. We meet clients in their own environment at a time which best suits them.
4. We take into account all of the options.
5. Families are able to avoid the distress a hasty ‘fire sale’ of the family home can cause..
6. Elderly residents can have the comfort of still owning their home.
7. The family home can remain an exempt asset.

Distribution of our new brochure will commence in the coming weeks. If you would like more details, please contact me via face-book or on 07 5471 0344 or mobile on 0412 078 785.

Regards,

Peter Bolitho

22/07/2013

Everybody knows at least 1 person who would benefit from having a Reverse Mortgage loan! Everybody knows of an elderly Aunt or Uncle, or an elderly neighbour or friend, who could use a little extra money to help them to ENJOY their Retirement – rather than merely ENDURING their retirement.

Simply ask that person to contact me to look into whether a Reverse Mortgage loan would be available AND be of assistance to them. If they eventually take out a Reverse Mortgage loan with us, I WILL PAY YOU A $100.00 REFERRAL FEE for merely referring me to your friend, relative or neighbour. All they have to do is tell me that you referred them to me.

Reverse Mortgage loans are specialist loans, ONLY available to home-owners over the age of 65! Typically, these loans are used by older Australians to supplement their retirement lifestyle. Retired people on a fixed income or on a pension often have sufficient income to meet their ‘day to day’ costs, but the extras such as –
• Health Care and Medical costs
• Overseas or interstate travel expenses
• Up-grading their ‘retirement car’
• Assisting children or helping with grand-children’s education expenses
• Paying off credit card, personal loan or mortgage loan debts
- are often not able to be met from their fixed income or pension.

The big advantage that Reverse Mortgage loans offer to these retired people is that there is no requirement to make regular repayments* to the loan. Often we see borrowers ‘saving’ $200 to $300 per month that they are currently spending on their credit repayments, by replacing those debts with a Reverse Mortgage loan.

So, if you would like to help out that elderly relative, neighbour or friend AND be paid $100.00 for doing so, simply show them this letter/email and have them ring me to arrange a confidential, obligation free, NO COST meeting to discuss their requirements. Please call me if you have any queries regarding this letter or Reverse Mortgage loans in general.

Peter Bolitho
0412 078 785