Residential Care Loan

Understanding the Residential Care Loan: What You Need to Know

For many older New Zealanders, the prospect of moving into long-term residential care comes with significant financial concerns. Residential care can be expensive, and not everyone has the resources to cover the cost upfront. That’s where the Residential Care Loan from Work and Income can help.

What is the Residential Care Loan?

The Residential Care Loan is a government-backed loan designed to help people pay for the cost of long-term residential care if they don't qualify for the Residential Care Subsidy. It's managed by Work and Income, part of the Ministry of Social Development (MSD).

This loan ensures that people who are required to pay for their own care due to their income or assets are not forced to sell their home immediately. Instead, the government steps in to pay the care costs, which are then recovered later—usually from the person’s estate after they pass away or sell their home.

Who is Eligible?

To qualify for a Residential Care Loan, you must meet several criteria:

- You’re assessed as needing long-term residential care.
- You’re aged 65 or over (or aged 50–64 and single with no dependent children).
- You don’t qualify for the Residential Care Subsidy based on the means assessment.
- You have assets that include a house or property.

It’s important to note that you must go through a financial means assessment first. Only when you’ve been found ineligible for the subsidy can you apply for the loan.

How Does it Work?

Once approved, Work and Income will pay your care provider directly. The loan amount accumulates over time, including interest, and is secured against your property. Repayment is usually made from your estate after your death or when your house is sold. You’re not required to make regular payments during your lifetime.

The loan isn’t open-ended—there’s a cap based on the cost of contracted care services in your region. If your care costs exceed this, you’ll need to cover the difference yourself.

Things to Consider

Before applying, it’s worth discussing your options with a financial advisor or lawyer. Taking on a loan, even one that’s repaid later, can have long-term implications for your estate and family. The loan is voluntary, so you’re not obligated to accept it, but it can provide peace of mind if you’re worried about affording quality care.

Also, your family should be aware of the arrangement, especially if you plan to leave your home to loved ones. Once the property is sold, Work and Income will recover the debt from the sale proceeds.

Learn More or Apply

If you're considering long-term care and worried about costs, the Residential Care Loan may be a solution worth exploring. Full details about eligibility, how the loan works, and how to apply are available on the official Work and Income website.

Learn more about the Residential Care Loan