Helping older Victorians
For Victorians wanting to stay in their homes longer, the budget is expanding the reverse mortgage scheme and making it more accessible for pensioners.
This may be attractive to asset-rich but cash-poor pensioners who have seen the value of their family home increase dramatically but have not been able to access it for fear of losing the pension.
How reverse mortgages work
With a standard mortgage, you borrow a lump sum and pay it back over time. With a reverse mortgage, small amounts are paid to you and the balance is paid back when you either sell the house or it becomes part of your estate.
This allows asset rich but cash poor pensioners to access the capital equity in their home.
While it will not suit everyone, having the government provide reverse mortgages will allow pensioners access to reverse mortgages at a lower interest rate than other commercial operators, with the interest rate on offer currently 5.2 per cent fixed compared to more than 6 per cent in the commercial market.
For more information on reverse mortgages, visit MoneySmart.
In addition, seniors will be able to earn an additional $50 every fortnight without triggering a reduction in their pension.
The Budget also announced 14,000 additional high-level home care places in 2021-22. While this is welcome, it is only a first step in addressing the shortfall in aged care.
It is also good to see acknowledgement of the difficulties involved in navigating the aged care system, with $60 million dedicated to making the myagedcare website more accessible for seniors.
In addition, the budget identified that a new Aged Care Quality and Safety Commission will be introduced to address abuse of senior citizens.
The Budget is also committing $1 billion to the National Housing Finance and Investment Corporation to improve housing affordability.
The National Housing Finance and Investment Corporation will use tailored financing to partner with local governments in funding the infrastructure necessary to unlock new housing supply and lend to not-for-profit community housing providers to help build new homes for those on low incomes.
Find the RACV media release on the budget here.