Equity Release

Providing you are over 55 equity release may be able to help pay for your care at home or to afford a better quality care home.

Equity release can allow you to release some of your home’s value and allow you to remain living in your home for the rest of your life.

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.

Modern Lifetime Mortgage versions of equity release schemes are not only safe, but they are also much more flexible than they have ever been. You can now choose 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 on a pay-as-you-go basis.

Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.

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 set up a drawdown facility to draw from to pay for carers, you may outlive the amount released. If this happens and you are single, you may then have no other option but to move into a care home, sell your home and pay back the accumulated debt. If married, whilst your spouse would still be able to remain living in the home if you needed to go into care and could remain there until they died or went into care, they may be left with insufficient money or equity to pay for any care they may need in the future.

This is a lifetime mortgage. To understand the features and risk, ask for a personalised illustration. 

Buy to Let Mortgages can now help pay for a care home.

Whilst most equity release schemes only allow you to release money from your home whilst you live in it and only expect it to be repaid within 12 months of moving into any care, home there is now one major equity release provider who offer a Buy to Let Mortgage that requires no monthly repayments 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, could potentially consider whether 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. However, if you need care in a care home but need to be a self-funder you should also check eligibility for your Local Authority Deferred Payments Arrangement as interest would normally be considerably less than that offered by equity release.   

This Buy To Let Mortgage is not regulated by the FCA and although sharing most of Equity Release Councils standards do not offer all their safeguards.

Risks

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