The conversations of life

La Trobe Financial – 21.05.17

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Clinton: Moving into aged care, the financial aspect can be very complicated. I’m, despite the fact we’ve been discussing this for a few months now. Ladies I’m still confused by the concepts of RADs and DAPs.

Annie: I don’t think you’re alone in that Clinton.

Jill: Honestly Clinton, I run a forum on our website agedcare101 and every day there are questions coming in about the finances around aged care. And you know some of these RAD’s can be quite a large amount of money. I mean they can be more than 500,000 dollars.

Clinton: There are a lot of different options on how you can finance this. It’s not always about completely selling the family home and liquidating that cash. Martin Barry is from our sponsors La Trobe Financial and can help us explain how financially this works. G’day Martin.

Martin: G’day.

Jill: Welcome Martin. Thanks for joining us. So you offer an aged care loan that can be used specifically to assist the consumer to pay the RAD and the DAP is that right it’s a combination?

Martin: That’s right. So La Trobe Financial offers the aged care loan which can be used to pay the RAD. So that gives consumers a choice. You can keep your home, you can renovate, you can keep that valuable asset. But with the facility you do have the option to pay this RAD DAP combination. The RAD/DAP combo as it’s called.

Annie: So just the RAD is the deposit that you pay when you first go into the home and that’s refundable when you leave. And the DAP is what you have to pay daily. Sort of like a nightly accommodation fee.

Martin: That’s right. So the RAD is the cost of the room but you don’t have to pay it in full. You can pay a smaller RAD and then pay a daily fee. You can ask the facility provider to deduct the daily fee from your RAD and that improves your cash flow situation.

Annie: So basically if you’re looking at moving into a nursing home let’s put this into a scenario so we can all understand it. So if you’re looking at moving into a nursing home and they’ve said to you your RAD is 600,000 dollars and you may want to pay that all up front in a lump sum then when you move out you’ll get 600,000 dollars back minus a little bit or whatever. And then on top of that every day you have to pay a certain amount to be within the aged care facility. So there are other options available.

Martin: So in that example if you paid the 600,000 there would be no daily fee to pay. If you paid 300,000 using a loan, you then have to pay the remainder 300,000 on a daily rate.

Annie: And that’s where you can come in and help out.

Martin: So we help out with the loan and then you can ask the facility to deduct the daily amount from the 300,000 RAD.

Clinton: So often these funds would be generated through selling a property. Selling a family home?

Jill: To pay for your RAD?

Clinton: Yeah. In the first place. But if you didn’t want to do that are there other financing options available?

Martin: That’s right. So you can use a loan for example whilst you renovate the property or lease the property to a family member and then you can keep that valuable asset. It gives you those options.

Jill: So I’m assuming it’s a loan obviously so that’s going to incur an interest payment on that. What sort of interest are we looking at?

Martin: So the La Trobe Financial aged care loan has an interest rate of 5.6% currently and you can pay that interest or it can accrue on the loan and therefore you don’t have that cash flow that you have to find every month.

Clinton: Where this might be really useful for many people is the decision to move into aged care sometimes can be made pretty quickly.

Jill: Often it’s made very quickly.

Clinton: But depending on the market conditions of the real estate market or your family circumstances you may not want to sell the family home very quickly. You might want to time that for two years down the track or six months. So that’s where potentially financing through La Trobe Financial actually may be a very viable option for you. It makes sense.

Martin: That’s right it gives you the flexibility. You can have the loan for five years. You can have the loan for six months. Entirely flexible.

Jill: Right. So how do you go about setting the loan up then. What’s the process.

Martin: Well just call our friendly staff on 13 80 10 and they’ll help you out.

Clinton: La Trobe Financial are sponsors of Older, Wiser, Happier but this is offering people who are facing important life decisions flexibility.

Annie: And it’s really hard to know where to go. From our own experience we even found that. You walk into the nursing home or the aged care facility and you’re confronted with this wad of paperwork.

Jill: All these figures. And you just go oh okay. And because you’re not prepared for the situation and it’s not like you have education before you go into this situation to know that you can walk out and go and ask the questions is quite nice. So it would be worthwhile would it Martin for people who are thinking of this process is necessarily not coming you know in the next week or so. But it is certainly in the foreseeable future to come and look at your website, speak to your guys so that they at least have got some options there. When the time comes.

Martin: Absolutely. So we can help walk consumers through the product. And we can also give you feedback on particular scenarios as well.

Annie: That’s a great idea.

Jill: Yeah. Because at the time normally when it happens everyone is very emotional. Stressed and you’re making decisions sometimes on the hop. Sometimes like we had.

Annie: And it’s left to one individual out of a whole family of siblings to be making a decision on behalf of everyone whereas at least if you can get some communication happening beforehand you know exactly where you’re at.

Martin: Indeed. Happy to help.

Clinton: Thanks for coming in today Martin.

Martin: No problem.

Jill: Thanks very much Martin.

Clinton: Great information Martin Barry from La Trobe Financial. They are sponsors of ours their website is latrobefinancial.com.au. Remember everybody’s financial circumstances are unique and different so of course we do suggest that you seek independent financial advice. But La Trobe Financial certainly can help you out. latrobefinancial.com.au. This is Older, Wiser, Happier with the Donaldson Sisters.

The Donaldson sisters focus on living today and looking forward positively to the next 10, 20 and 30 years. They get important topics and perspectives on the table for open discussion – topics that aren’t often raised in the mainstream media and voices and perspectives less frequently heard.


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