Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.
Modern equity release schemes are not only safe, they are also much more flexible than they have ever been allowing you to chose whether you make any monthly repayments or not, and also whether you take all of the available money in one single payment (possibly to buy a care fees annuity) or simply draw it down overtime possibly to pay for carers.
The amount of money that can be released is based solely on age (or age of youngest if the property is jointly owned) and your property value.
The amount borrowed (plus any accumulated interest) will only ever need repaying when you (or if married – the last one of you) dies or moves permanently into a care home. Therefore, they can be a very useful way of funding care at home but you do need to realise that the amount you can borrow is limited.
Consequently, if you do not use the money released to buy an annuity and simply chose to draw down the money, you may outlive the amount available. If this did happen and you were single, you may then have no other option but to move into a care home and sell your home when you would need to pay back the accumulated debt.
Whilst most equity release schemes only allow you to release money from your home whilst you live in it and would also expect it to be repaid within 12 months of moving into care, making them unsuitable for paying care home fees, there is now one major equity release provider who will do equity release on either a second - investment property, or on your former home, providing it is let.
This means that if you need to move into care and have to be a-self-funder, you or your legally appointed representative, can now chose to keep the home, let it to provide some valuable extra income and still release some money from it. This could then be used to meet ongoing shortfalls in fees, or to purchase a care fees annuity.
Equity release may not be right for everyone and will inevitably result in less money being available for any spouse who remains in the property or ultimately beneficiaries. It can also affect any means tested benefits and if used to pay for your own care at home, could even prevent you qualifying for any local authority funded domiciliary care/direct payment award.
Consequently, you should only proceed with releasing equity to pay for care after first receiving expert advice from an adviser qualified to give both equity release and care fees advice. To help, should you wish to discuss releasing equity form your home to pay for care, you may like to call our specialists Care Financial on 01476 589 565.
Head Office Address:
Advice on Care
267 Barrowby Road, Grantham,
Lincolnshire, NG31 8NR
To receive every issue of our magazine by email, simply register your name and email address in the form below.
The information contained in this web site is for general information only and is not financial, investment or tax advice. It is also subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. If you would like to discuss a particular issue or generally ask us how we can advise on your particular situation then please contact us.
© Copyright 2021 Advice on Care.