We may all be living longer these days, but that brings its own issues. Poor health in advanced old age means many of us end up struggling to live independently, and have to accept help from carers if we want to stay in our own homes, rather than go into residential care.
The price of such home care can be prohibitive, and there is no guarantee that your local authority will offer much in the way of financial assistance, either, especially if you have savings or other assets.
Many older people who need help to pay care home costs end up having to sell their homes, so they can downsize to a smaller house. This can be particularly upsetting for elderly people, many of whom will have lived in their homes for decades.
Once any savings have been eaten up by fees, an older person who needs care faces a dilemma - to stay in their own home without help, or sell up and go into a residential or nursing home.
Thankfully, there is now an alternative which many people find useful - equity release.
If you own your own home, and are over 55, you may be able to access an equity release scheme, where you ‘release’ some of the cash tied up in your property. This money, which can be a considerable sum, can be used in whatever way you please, whether for a special holiday, to buy a new car or to pay for care home fees.
There are different types of equity release schemes, but there are usually no monthly payments to make. You can stay living in your house, and the loan is not normally repaid until after you die or go into residential care on a long-term basis.
Involving your family in this process is essential, to provide both the emotional support and a second opinion during the decision making process. If you do decide to take the road to equity release, they can be there at any meeting with the equity release adviser, who should be suggesting the same.
There are many ways of releasing equity for care home costs with the most popular being a drawdown lifetime mortgage. Rather than taking a large lump sum all at one, drawdown allows you to take ‘little & often’ as the financial needs arise.
The benefits of the drawdown lifetime mortgage also affect the beneficiaries of the estate as the lender will only charge interest on what has been withdrawn, not on the overall facility. That way, interest charged will be lower than taking a large up-front capital sum.
By taking smaller cash lump sums for long term care, can also help should you be in receipt of any means tested benefits. The amount withdrawn from equity release can be managed so that its keeps savings below any benefits level that could otherwise have impacted on the money received.
If you anticipate having to pay for care home costs, looking into equity release is an option you may want to consider.