Equity Release and Care
On The National Careline helpline one question comes up very regularly and that is, I want to remain in my own home, so how do I pay for my care?
When talking with people about their options for their care, most, by far want to stay in their own home and have someone come in to provide the help they need.
We cover the usual things like claiming the correct rate of Attendance Allowance and ensure that people have their Local Authority Assessment of Needs done. This is because it will identify any help or need which can be sourced from various departments in the Local Authority.
However, with the cutbacks in Local Authority spending on care, many more people who used to qualify for help, cannot get any help now. But they still need help. So what do they do?
People don’t usually want to involve relatives or their children because they don’t want to be a burden on anyone. The children and relatives often live a distance away, are working and have commitments of their own and, with the best will in the world, they cannot care for someone without another part of their world having less of their attention.
Often, older people continue to live in their property without making adjustments for their needs as they become less mobile which can create quite dangerous situations where trips and falls can easily occur. Equity Release can only be taken out on properties that are in good repair but this would not include the provision of handrails or a downstairs loo etc.
Where a home needs handrails fitted or bathing facilities etc., a person from the Local Authority ‘Home Improvement Agency’ scheme will visit the property to assess what is needed and will then organise getting the job done. Grants are available for this but they are means tested with a limit of £30,000 and your relative must meet the eligibility criteria to qualify.
What is Equity Release and how can it be used to fund my care?
Equity Release is a way of releasing capital from your home. It is designed for older people who usually have little or no mortgage but have a limited amount in accessible cash; in other words, they are asset rich but cash poor.
Depending upon the scheme, you can use equity release to get a tax-free cash lump sum, or to 'draw down' smaller amounts of money as and when you need it. It enables you to take some of the capital tied up in your home to use for another purpose and many people have discovered using it as a way of paying for their care.
With a growing elder population, there are different schemes coming out all the time and you’re sure to find one that will give you the flexibility you need.
Having released capital from your property, you then have the funds to arrange the care you need. You retain your independence and control your future and, most importantly you can remain in your own home.
Most people who release equity do it because they cannot get the amount of care they want from Social Services; or the care received is inadequate and inflexible. They want to retain their independence and remain in their home safely but they cannot do this without having a carer coming in to help them.
By staying at home and taking care of yourself with help from a carer, keeps people in the community and near their friends. They may never need to go into residential care.
This is an important point as it is important that people are happy and settled in their surroundings as they tend to live much longer than those who are not.
What happens if I use all the value of my property?
Nothing, you can remain at home receiving your care as all good Equity Release schemes must have a “No Negative Equity Guarantee” which means that you or your estate, will never owe more than the property is worth when it is sold. If you have a partner, the money isn’t repayable until the second death. If the value of your property at the sale is worth less than the value of your loan the amount is “written off”.
Equity release with a “No Negative Equity Guarantee” gives people the right to live in the property until they pass away or move into another form of care such as long-term residential care. If this happens, then the property is sold, the equity release company repaid and the remainder used to go towards your care home fees
Obviously, there will be a smaller amount of money to go towards your care fees in a home but you may never reach the point where you need to go into care.
You may leave a smaller inheritance for your children but, it is often the children who call to discuss their relative’s options. All they want is for them to be happy and, above all, safe in their own home.
Finding out more…
Equity Release isn’t for everyone and it is important you find out the facts first. For instance, people could consider raising cash by downsizing or, if you want independence but with care if you need it, consider going into sheltered housing.
It is very important that the solicitor you have is fully conversant with equity release as this will make the whole process smoother.
Which has produced a very useful checklist for those considering equity release which is well worth a read and, for your protection ensure that you take independent advice and check that they are suitably qualified by holding the ER1 or CF7 qualification.
If you want to find out how much equity you could release click here.