Using equity release
to fund live in care

Book a care consultation

How care will be funded in later life is a vexing and challenging problem. The funding of live-in care, in particular, is especially tough to resolve, as the costs involved are higher than some other forms of care, given that a carer will need to be present at all times. 

Equity release is one option for those who own their homes and could access capital through such a scheme. It involves releasing some of the equity “tied up” in the value of a person’s property without putting it on the market. This page will explore what equity release is, what it can enable, and what you and your loved one should think about before proceeding with what can be a transformative but challenging process.

What are the different types of equity release schemes?

One of the complicating factors here is that there are many different types of equity release schemes, and often it’s necessary to go through them all to work out which one suits you best.

One type of scheme is a lifetime mortgage. This is one of the most well-known equity release schemes, although it is not always fully understood. It works a bit like a traditional mortgage in that the bank lends the cash to the borrower, but instead of buying a house, it can be used for other purposes. However, as with a traditional mortgage, the loan is secured against the property’s value, so it is repaid when the property is eventually sold. 

Another option is the fixed-repayment mortgage. In this instance, any interest payments are removed and instead, one defined amount is chosen. When the home is sold, the money is repaid at a fixed price. Alternatively, a home reversion plan can be explored: this would involve the outright sale, although your loved one would be permitted to remain living there until they die without paying any rent. 

Whatever scheme is chosen, you must understand the long-term consequences. Those who are beneficiaries of any will that the loved one might have made or will make may also want to be consulted, as there could be bills to pay after the death of your loved one if the equity release scheme cannot settle the loan. 

How does equity release work for live in care?

Seeking funding

Equity release gives a loved one the right to remain living in their property while accessing a portion of its value without selling. For example, if your loved one owns their home outright, and the property is worth £250,000, they wouldn’t be able to access or spend that £250,000 until they sold the property. The value, in that sense, is “tied up” or inaccessible.

First steps

Equity release is one way around the problem. By coming to an agreement with a lender or an equity release provider, your loved one can “spend” some of the value of their home while continuing to live there. The difference, of course, is that there is a long-term loss of the asset, and there will be less for beneficiaries to inherit. It is an option for those looking for ways to fund live-in care, which can be very expensive.

Second strand

Equity release is appealing in lots of ways to those considering live-in care. House price growth in recent decades has meant that some older homeowners have an asset worth a lot of money, which they can’t access. If a person wants to be cared for in their own home but doesn’t have the funds to pay, equity release is undoubtedly an option to be explored.

Contacting your authority

Some people have invested in their home via a mortgage for many years, and it makes sense to tap into that legacy of hard work to fund appropriate care towards the end of their life. That doesn’t mean that it’s right for everyone, but it does mean many people who need to pay for live-in care end up taking this funding route.

Direct payments

There are many different forms of equity release schemes, and it’s vital that you understand them before you make big decisions. It’s also essential to make clear that no equity release agreement should be entered into until you and your loved one have been fully informed about what it entails. The services of an independent financial advisor should always be sought before any deal is finalised. 

Other live in care funding options

How do you go about using equity release for live in care?

Once you are satisfied that you have an overview of the equity release world and the different options it can offer concerning long-term care, you can start to think about whether it’s right for you and your loved one. You should ensure that you fully understand how it works on a mathematical level and also what the long-term consequences of your preferred equity release plan might be for all parties. 

You must be sure that equity release is suitable for you. In some cases, it will make sense but not in all. If your loved one might not live for a long time, for example, a fixed-repayment mortgage could end up being problematic. It’s essential to run some modelling for different scenarios, usually with the assistance of a trained professional.

How do you go about using equity release for live in care?

Once you are satisfied that you have an overview of the equity release world and the different options it can offer concerning long-term care, you can start to think about whether it’s right for you and your loved one. You should ensure that you fully understand how it works on a mathematical level and also what the long-term consequences of your preferred equity release plan might be for all parties. 

You must be sure that equity release is suitable for you. In some cases, it will make sense but not in all. If your loved one might not live for a long time, for example, a fixed-repayment mortgage could end up being problematic. It’s essential to run some modelling for different scenarios, usually with the assistance of a trained professional.

If you decide to go ahead with an equity release scheme, you should ensure that you are not using the services of somebody who is pressuring you or your loved one to agree to the plan. That could be a red flag. Instead, you should do independent research into providers and approach them yourself. An independent financial advisor, or IFA, may be able to help. There is a cost involved in using an IFA, but it can be worth the money.

Equity release schemes are complex, but they can, in the long run, be beneficial for you and your loved one. By making sure you are fully

informed about all the options and how they work, you can increase the chances that your eventual decision on whether to use an equity release scheme is the right one. 

Need more information?

If you want to discuss live-in care with us and the options that are available, you can call us on 0204 5166004. Our dedicated team are on hand to answer any questions and how Lifted Care can help you or your loved ones.

Do you have another care question?

Speak to a Care Advisor

It’s simple to get started

Get in touch

Give us a call or download the Lifted app to speak to get started

Get a free quote

Speak to our experts

Our care experts assess your loved one’s needs and together you design the support that’s right for you.

Get Lifted

We’ll match you with our Carers and get started. We’re here
to help every step of the way.

Join our community

If you would like to be a part of the Lifted Community and receive
regular Lifted updates, news and helpful care tips