Using Equity Release to Pay for Care UK, London, Middlesex
If you or your parent needs live-in care, then paying for care can be very expensive, and many find that they must use savings to provide for this.
In such a case, if you or your parent still owns the property and has no or little mortgage outstanding, then Lifetime equity release mortgages can be a very useful and tax efficient way of releasing some of the home’s value, in order to have extra money required for care.
This is because with Lifetime equity release mortgages, you do not need to make any monthly repayments (thereby maximizing the amount available to pay for care).
You can either opt for:
- A drawdown plan, which enables you to have a maximum pot (money) and you can continually withdraw from it until it becomes exhausted,
- You can apply for one single lump sum that can be possibly used for buying a “care fees annuity” from a specialist insurance company. The company, in turn, will then guarantee to pay a specified TAX-FREE amount for your care for an indefinite period.
PAYING FOR CARE IN A CARE HOME UK
Until recently, it was not possible to arrange equity release on properties left vacant because you or your parents have moved into care. Now, if you or your parent still owns the property and has little or no mortgage outstanding, we can now offer you a buy to let equity release scheme.
This will not only:
Allow you and your family to keep the property and let it, in order to receive the money you need to put towards your care fees, but if required will also allow you to release some extra capital, so that you can pay for better care or even buy a care fees annuity.
The scheme will allow you to make monthly repayments on the amount borrowed and instead allow the accumulation of interest and only repay it when you eventually sell the property or upon death.
You will be able to sell the property and release any remaining equity at any time before death.
DISCOVER WHETHER YOU COULD RELEASE ENOUGH
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Conditions – Maria:
Is 88 years of age and widowed
Because of her Dementia, she is as of now paying for living in care.
Care expenses alone are costing £55,000 p.a.
Maria’s income is only enough to cover bills
Maria has recently selected her children as her Powers of Attorney.
Her property is worth £450,000 and has no home loan on it.
Maria now just has £38,000 left in funds.
On the basis of her age and property estimation, we could help her Powers of Attorney to release either:
- Up to £ 243,000 in one single amount which could then be possibly utilized by her POA’s to purchase a care fees annuity, to secure £55,000 forever
Or then again
- Make an all-out facility of £243,000 and simply take £10,000 at first, leaving the parity of £233,000 to be accepted just as required. This would then just give enough for around 4.23 years.
N.B. This is a fictional case just to help demonstrate how equity release could be used to pay for care. The amounts available will depend on age and property value and will vary with changes in lending criteria. To check the latest amounts you could release, please use our free calculator.
Equity Release may not be the best way of funding care and you should always seek specialist advice before releasing equity.
Although landlord equity release schemes have almost the same characteristics as they are in case of Lifetime Mortgage, yet they cannot be considered as Lifetime Mortgage, as defined by the FCA. Therefore you will not benefit from the protection of the FCA conduct rules or the Financial Services Compensation Scheme (FSCS). In addition, they don’t meet the Equity Release Council standards because they do not give you the right to remain in the property till death.
CARE FEES ADVICE
Paying for care is an area that requires specialization of financial planning. Depending on your circumstances, there may be other ways of using the property to pay for care on lower interest rates and you may not even have to pay for your care.
So when it comes to considering equity release to pay for care, it becomes very important for you to speak to a specialist and not just an authorized adviser. This is where we can help.
Please contact us today to find out more.