Hi, my mother has retired and wants to buy into a retirement village. She has no debt on her home and wants to look at renting her existing home until the property market picks up again. That means she will need to borrow against her home to buy into the retirement village. The rent should cover the loan. Our concern with what’s gone with the Royal Commission is will she be able to get a loan? If she has to sell her home that could take a while, or worse still, she gets a bad price in an under-performing market.

Hi Anthony,

my advice would be to get in front of an advisor with experience in this area. There are lots of things that need to be considered when making this transition, and I have found that its often not as simple as what you are proposing above.
this is a very important step for your mother, and I believe that the money you spend on some advice at this point will pay for itself tenfold down the track
good luck
bc

Hi Anthony,

Tread very carefully with retirement villages, the exit fees they charge when your mother either wants to move, needs to go into care, or is sold in the estate can be horrific. It's not so bad if your mother, you and whoever else is key in the relationship knows about it and is comfortable with what they are signing up for but I have seen many times the look of shock when $200,000 or $300,000 disappears in the sale.

Can your mum borrow against the house? I don't know, you'd need to chat to a mortgage broker.

Also, when the time comes to sell your mother may be able to take advantage of some downsizer super contribution limits that have been introduced. Whether or not they are used should be explored as they can be very useful for estate planning purposes.

All the best.
James