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Over the past three years, the aged care interest rate, known as the maximum permissible interest rate (MPIR), has more than doubled. or signup to continue reading The aged care interest rate applies to any amount of unpaid refundable accommodation deposit (RAD) and is set on the date you move into aged care. Changes to the interest rate don't affect existing residents unless they move rooms or to another , but they do affect the price of the daily payment for new residents.

In June 2021 the aged care interest rate was 4.01 per cent per annum, now it is 8.34 per cent per annum.



Someone who moved into a $500,000 aged care bed in June 2021 has a daily payment price of $55 per day while today that same bed has a price of $114 per day. This increase to the cost of aged care accommodation payments has made retirement village buybacks more valuable. Unlike most other property transactions, retirement village operators are required to buy your home if it hasn't sold within a certain period after you leave, it's called a "guaranteed buyback".

The buyback functions much like insurance in that if your home sells within the timeframe, you receive the proceeds upon settlement. If it doesn't sell within the timeframe, then the village operator buys it back from you. The amount of your guaranteed buyback is your exit entitlement amount, the amount you would otherwise receive if the home had sold.

This is normally calculated based on the amount you paid to purchase your home minus any exit .

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