Can a Lifetime Mortgage Cover the Cost of Care?

We are often asked by clients if they can use the value of their home to pay for long-term care. It is a question that usually comes with a heavy heart; the realization that you, or a loved one, may need extra support can be stressful enough without the added worry of how to pay for it.

The costs are undeniable. Recent data highlights that the average cost of residential care in the UK has climbed to £1,298 a week, or roughly £67,496 a year. For nursing care, that figure rises even higher to £1,535 a week, or nearly £80,000 a year.

Facing these numbers, many homeowners naturally look to their biggest asset—their property—for a solution.

The Goal: Staying in the Home You Love

For most people, the priority is not funding a room in a residential home, but rather funding the support needed to avoid going into one. This is where a Lifetime Mortgage (the most common form of Equity Release) is most frequently used.

If your goal is to receive domiciliary care (care in your own home), releasing equity can provide the tax-free cash needed to pay for:

1.) Visiting Carers: Private carers who come in daily or weekly to help with washing, dressing, or household tasks.

2.) Home Adaptations: Installing a stairlift, walk-in shower, or wheelchair ramp to make the home safe and accessible.

3.) Respite Care: Funding temporary breaks to support family members who act as unpaid carers.

By using your housing wealth this way, you may be able to prolong your independence and remain in familiar surroundings for years longer than you otherwise could.

It should be noted that accessing housing wealth could affect eligibility for means-tested benefits, so it’s important to seek professional equity release advice.

What happens if I need to move into a care home permanently?

It is vital to understand how Equity Release works if you eventually move into long-term residential care.

A Lifetime Mortgage is designed to last until the last remaining borrower dies or moves into permanent long-term care. If you are a single borrower and you move into a care home, your plan usually ends. Your home must be sold to repay the loan and interest, meaning you cannot use an Equity Release plan on your current home to pay for a room in a care home after you have moved out.

However, if you are a couple and one of you moves into care while the other remains in the property, the plan can typically continue. This can provide vital funds to pay for the partner in care, while ensuring the partner at home is not forced to sell up.

How Much Can You Borrow?

The amount depends on your age, property value, and health.

Typically, the older you are, the higher the percentage you can release. Releasing a higher percentage of your property’s value will reduce your remaining equity more quickly, which may limit the amount of inheritance you can leave

Some plans offer enhanced terms if you have certain medical conditions or lifestyle factors.

Find below an estimate of the percentage that may be available to be released based on individual circumstances and your age.