Releasing equity to pay for care

As care costs in the UK continue to increase and people live longer due to improvements in life expectancy, it’s essential for anyone over 55 to understand the options available to help pay for care.  

You may consider releasing equity from your property to fund your care costs so you can stay in the home.  This can range from in home care (also known as domiciliary care), home adaptations right the way through to covering the costs of moving you, or a loved one, into a care home. In this article, we’ll outline the key points you should be aware of and the considerations to discuss with a qualified financial adviser if you’re exploring equity release to fund care.

Key considerations  

1. The importance of independent financial advice 

Only regulated advisers can assess the full range of care funding options, including plans that guarantee care fee payments for life. It’s best to arrange a meeting with an adviser sooner rather than later, so you can review all of your care funding options.

2. Impact on means-tested benefits

If you are considering equity release, it’s important to be aware that it can influence means-tested benefits. For guidance on your personal circumstances, you should speak to a qualified financial adviser or benefits specialist.

3. Lump sum and drawdown lifetime mortgages

A lifetime mortgage is a type of loan secured against your home that allows you to release tax-free funds. This can be taken as a single lump sum or through a drawdown facility, where smaller amounts are accessed over time.

• Lump sum options can provide a larger amount upfront, which some people use for significant one-off costs, such as moving into residential care or making major home adaptations.

• Drawdown facilities allow funds to be released gradually, so interest only builds on the money actually withdrawn. This approach can help manage costs that arise over time.

Because care needs and related expenses can vary, having flexibility in how funds are accessed can be useful. However, the impact on benefits and long-term finances will depend on individual circumstances, so it’s important to seek guidance from a qualified financial adviser or benefits specialist.

Please note, equity release has advantages and disadvantages, which you can learn more about from your independent financial adviser, and from our ‘what is equity release’ explainer page.

The alternative ways to fund care 

Equity release can serve as one way to pay for care or contribute to your funding plans. My Care Consultant, an organisation that guides people through the UK’s complex care system, has identified nine ways to pay for care and offers informative guides on accessing social care from local authorities.

Read through these alternative funding options here>

You can also learn more about how to navigate your overall later life care options, thanks to an extensive resource page filled with helpful and exclusive resources from My Care Consultant. View our later life care page here.

Disclaimer: This article provides information on lifetime mortgages. To understand the features and risks, ask for a personalised illustration.