When you’re making the decision to move into a retirement village, one of the things you’ll need to consider is the exit fee. This fee can be quite expensive, and it’s important to know what you’re getting yourself into before signing on the dotted line. In this blog post, we’ll discuss what a retirement village exit fee is, how it works, and what you can do to prepare for it.
What is a retirement village exit fee?
A retirement village exit fee is a one-off cost charged by retirement villages when a resident leaves their unit. This fee can also be called deferred management fee (DMF), departure fee, or exit charge.
The retirement village exit fee is based on the percentage of the ingoing contribution before you move into your unit. It is calculated using both how much you initially paid for your unit and for how long you stayed in the retirement village. This means that if you live in your unit for four years as opposed to an extended period of time, you will pay a lower percentage towards your retirement village exit fee.
Exit fees can vary from village to village and can even change over time. It’s important to thoroughly read and understand the retirement village contract before signing it, and it’s always best to seek professional financial and/or legal advice first.
The money from retirement village exit fees goes towards covering the essential costs of the retirement village and its facilities.
How do you prepare for the retirement village exit fee?
One way to prepare for the retirement village exit fee is to ask about it during the initial contract negotiations. Make sure that you fully understand what the fee will be and how it will be calculated before signing on the dotted line. It may be payable on the purchase or sale price, and you might have the option to either pay it upfront, deferred, or in some cases in installments.
No matter what, it’s essential to factor the retirement village exit fee into your retirement planning. Make sure that you fully understand the fees before committing to a retirement village and stay informed on any potential changes to the fee structure. By being prepared, you can avoid any surprise costs in the future.
