Can I claim rental assistance?

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Because Gwenda is horrified at the rate at which the debt on her reverse mortgage is accruing, she is wondering if she can claim some kind of rental assistance.

Q. Gwenda

I have a reverse mortgage on my home, which is growing exponentially, and I currently receive the full Age Pension.

Is there any way I can claim ‘rental’ assistance as I’m basically renting here, seeing as I’m accruing a debt from staying in my home?

A.

You can only receive rent assistance if you actually pay rent. As you own the property, the value of which is excluded from your assets, you cannot claim rent assistance.

This is the same as anyone who pays a conventional mortgage on their property, while you may be accruing a debt, the value of your home will most likely be appreciating. However, if you are concerned about the rate at which your debt is growing, you should seek advice from an independent financial advisor.

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Written by Debbie McTaggart

27 Comments

Total Comments: 27
  1. 0
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    You sound like someone from the top end of town!

  2. 0
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    Isn”t this the reason pensioners are called names such as bludgers etc as they want everything for nothing.

  3. 0
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    Thankyou Gwenda, for pointing out a very important element in the reverse mortgage debate, that as well as losing our homes, the banks charge US compound interest as if we were borrowing from them.

    Well, it is an arguable point, – they charge us compound interest when we borrow from them, eg with a bankcard etc, so should we also pay on the other side?
    Whether they are morally or legally entitled to do so is worth looking at, but that they currently do is important, – we may think our house worth 300 thousand or three million will give us X number of years which is way longer than we expect to live, but with compound interest that time will decrease, as Gwenda says, Exponentially, ie the faster it falls the faster it will fall, we may remember the ancient Chinese story about a philospher who saved the country and wanted only, in payment, some rice, on a chess board, 1 grain on the first square, 2 on the second 4 on the 3rd, 8 on the 5th, etc, – sounds very reasonable doesn’t it, but by the time you get to square 48, it is more grains of rice than is estimated by some to be the number of atoms in the universe.
    My recollection is that the Emperor had the philosopher’s head removed, and I suspect that the reason Christ overturned the money lender’s tables in the temple was because they were charging compound interest.

    • 0
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      I can’t agree Lookfar, when you apply for a reverse mortgage, what is actually happening is that you are borrowing from the bank and providing your home as security. Interest is charged at an agreed rate and period and if that interest isn’t paid, it becomes principal and is subject to interest being charged against it.

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      All that is happening is that she is capitalising interest. I do this myself when I can earn more on the money than it is costing me to borrow it in interest. However the difference is that is is spending the money not investing it and using the extra money earned to live on.

  4. 0
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    It’s off topic from the original but reverse mortgages are good if you have no wish or need to leave your major asset, your house, to anyone, like children or family.
    If you want to spend your retirement cruising or flying around the world or exploring Australia and have no beneficiaries that you will upset(or don’t care for) then why shouldn’t you change your life and free up your money.
    Why should we, upon retirement, vegetate because we have no cash flow, when we have a perfectly good asset that can free us up and make for some wonderful years after our working life.
    I can’t see your logic Theo1943 unless you plan on being buried in your home?
    Now if you have family……………………

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      The discussion is about the interest charges, not about whether you can sell your house and fly around the world on the proceeds, and it is an important point as there is an element in the Govt, – especially the (neo) Liberal side, which would like to force every one with a house to reverse mortgage it instead of getting the old age pension, and then to rub salt into the wound the greedy banking crowd will want to charge compound interest, – either on the money drawn down, or worse, on the whole value of the house, so even one flight may be risky.
      Theo is correct, reverse morgages are a trap, particularly as they are at the present married to the ultimate parasitical leech, Compound Interest.

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      I agree people should be using their assets including their house to pay for their retirement instead of relying on welfare. After all once you are dead you no longer need a house so why not use it to fund your retirement. After all that is what people do who don’t qualify for welfare. They use their assets to fund their retirement. I can”t see why anyone with assets should not be required to do this.

      Of course if you don’t pay back the interest you then pay interest on that debt plus the interest.

  5. 0
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    I can live quite comfortably on the pension, in my own home, even though the rates keep increasing more than any other expense. I can even afford the maintenance bills, & still afford a few small luxuries.

    Perhaps Gwenda expects to enjoy more luxuries than she can fund from the tax payer funded pension. If that is the case, that is fine, & I hope she enjoys them. However if she wants to spend more money she has a reverse mortgage top allow her to do it. Perhaps she should be happy she has that facility, & not expect our kids to pay even more money from their earnings to give her those luxuries.

  6. 0
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    Time to downsize your house, pay out your debt and understand that the government is not a bank. I had to leave work, am caring for 2 members of my family and paying a mortgage. IF time get tough, would consider downsizing but asking for rent assistance is just not offered if you have assets. You could maybe look at mortgage assistance from Department of Housing.

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    A reverse mortgage is freeing the equity of your home for other uses.How its used is up to the individual,but the cash is borrowed from the bank and accrues interest like any other loan,You have the option to pay the loan back.If you dont the amount owing compounds.So start paying it back or be happy with your decision.You cant have your cake and eat it too

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      As i mentioned earlier, this is not an excuse to savage Gwenda, but simply to realise the large negative effect of compulsory reverse mortgage, which is not necessarily freeing the equity of your home at all, but simply the Govt. selling it to the banks in return for the banks paying your pension, no talk of interest in those proposals, but suddenly we find from Gwenda that there is not only interest, but Compound interest, so the Bank gets to have your cake and eat it also.
      You lose your home and your pension, leaving you to eat chagrin or grief.

    • 0
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      Banks have every right to charge her interest on the total debt owing. I am sure you expect the banks to pay you interest on the balance of your bank account not the amount you originally had before interest was added. That is how the system works so stop blaming the banks.

  8. 0
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    I’d rather like to know, “How do aged pensioners, obtain Dental assistance?” It is a disgrace. Dr’s can bulk bill. Dentists were overlooked & charge what they like.

  9. 0
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    Hey Boof – they don’t! Ya’ teeth simply rot – drop out – and then you live on porridge and liquids! lol lol ……… just being sarcastic ’cause I just went for a check-up (which I hate) and the dentist emailed me with an approx. bill for work needing to be done! Could go on a world cruise with the anticipated cost – lol – forget i!!!!!! 🙂

  10. 0
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    Hey Boof and Foxy, I don’t know about the other states, but over here in WA we have a Govt assisted system for pensioners. I am currently going through a process. I had my last 4 bottom teeth removed and going through the process of getting a bottom plate. Total cost $242.00 all up. Better than $1000 plus. OK your down town dentist might complete the process in 4 weeks, and mine is going to take 6 months, but the deal suits my financial situation. It all happens at a beautifully set up dental surgery at the local hospital.

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