How To Pay For Care Costs Without Selling Your Home

Care can be a substantial cost for the elderly and their families.

Many people who own a property worry that they’ll have to sell their home to pay for their care, whether that be residential care that requires them to move or to pay for a nurse or care worker to assist them in their home.

Some homeowners resort to selling their homes or have family members willing to sell their property to fund care costs.

This isn’t an option for everyone, but the good news is that there are other ways to fund your care – this blog post discusses the following topics…

• Do you have to pay for your care?
• Are you entitled to funding for your care?
• How will the council calculate the value of your property?
• How to avoid selling your house to pay for care
• What are the types of care available?
• Where can you go for advice?

Do you have to pay for your care?

Not necessarily. Suppose your local council is arranging your care for you. In that case, they will look at your financial situation, including savings, property, investments, pensions and any benefits you’re eligible for, to calculate how much you should pay for your care.

Are you entitled to funding for your care?

Will all of your benefits be included to means test your finances?

Some benefits, including the mobility component of Disability Living Allowance or Personal Independence Payment, may not be included when calculating your affordability for care costs.

How will the council calculate the value of your property?

If you are unable to arrange an independent valuation of your home, the council that arranges your care will appoint one to calculate its current market value.

If you still have an outstanding loan or mortgage on your property, this will be deducted from the overall valuation when it comes to means testing your financial ability to pay for your care.

10% is also deducted from the property value to account for any fees or expenses that may be payable from the sale of your home.

For example, your property is valued at £100,000, and you have an outstanding mortgage debt of £40,000. £10,000 (10% of the property value) is also deducted. This leaves a figure of £50,000 for the council to include in your financial means test.

How to avoid selling your house to pay for care

Many homeowners are unaware that the value of their home won’t be taken into account in the means test if it is still occupied by:

• Your partner or former partner
• Your estranged or divorced partner IF they are also a lone parent
• A relative who is aged 60 or over
• A child of yours aged under 18
• A relative who is disabled
• OR you’re arranging care and support at home

Another scenario in which your home wouldn’t be considered in a means test to pay for your care is if the care you require is only short-term or temporary.

Gift your home to a loved one

To avoid having your home sold to pay for your care costs, you might be interested to know that some homeowners gift their property away so that it won’t be counted in the means test.

This would mean you would give the ownership and all of the equity you own in the property to someone else and would no longer have any legal right over the property.

Many elderly people plan to leave their family members an inheritance, but the cost of care can prevent them from doing so. Giving their home away allows them to pass on money.

The downside to giving your home away to a loved one, especially if you do it while looking for care, is that it may be seen as a deliberate deprivation of assets. This could result in you still paying the same amount for care as if you owned your home.

Defer your payments for care

It may be possible for you to delay paying the costs of your care until a later date, for example, until after you pass away. The cost of your care would then be paid from selling your property.

A temporary delay could also be granted to allow you time to sell your home. Your local council is obliged to tell you this and check whether you are eligible.

Equity Release

Equity Release is a type of loan that is secured against your property.

Rather than sell your home to pay for the cost of care, you could borrow the money and secure the loan against your property.

The amount you can borrow will depend on several factors, including the amount of equity you own in your property.

There are two types of Equity Release which are:

• Lifetime mortgages
• Home reversion plans

You would still remain the owner of the property, and the loan would be paid back from the sale of your home when you die or move into residential care.

Interest Only Lifetime mortgage

An Interest-Only Lifetime mortgage is a loan secured against your home that allows you to release equity from your property.

Like a standard interest-only mortgage, you would be expected to pay the interest on the loan monthly, which ensures that the balance remains level.

This could be paid using savings, benefits or any other income you may have.

Your lender would examine your finances to determine whether this is an affordable option before approving this type of loan.

The remaining balance is paid back when you die or move into long-term care from the sale of your property.

If there is any money left over after paying your loan, your beneficiaries will inherit it.

Things you should know before getting an Interest Only Lifetime mortgage or Equity Release

There are eligibility checks and criteria that your mortgage lender will require you to pass before you can apply for an interest-only lifetime mortgage.

There are also factors that can affect how much you can borrow against your property.

What are the types of care available?

Finding the right care can be overwhelming, especially if you’ve never had to consider this option for yourself or a loved one.

There are many different types of care, and the cost can depend on the level of assistance you may need.

For example, health conditions, including Alzheimer’s, physical disability or terminal conditions, may require round-the-clock care.

The main types of care available in the UK are as follows…

Nursing home

This type of care offers services for those with specialised nursing needs, such as long-term illness or complex physical needs.

Qualified nursing staff would be available 24 hours a day to provide medical care and other forms of specialised support.

Short stay care

This might be needed if you’re recovering from illness or an operation and cannot stay at home alone.

Often, short-stay care provides a short respite for elderly people while they recover.

Dementia care

If you or a loved one has Dementia, specialist care may be required to support the complex needs that should be met.

This would involve a highly trained nurse or member of staff providing individual care in a safe environment.

Residential care

Maintaining a property and day-to-day chores can become very difficult for many elderly people.

Residential care is an option that allows you to keep your independence while gaining the peace of mind of assistance with everyday tasks such as cleaning, getting dressed, or bathing.

A residential care home is visited by nurses and GPs regularly, which means that medical care can be provided when needed.

At home care

Many people don’t require full-time care, and others wish to stay in their homes.

At-home care would involve a nurse or trained professional to visit your home.

This could be a suitable option for you if you need:

Depending on where in the UK you live, at-home care is usually around £20 an hour.

Where can you go for advice?

If you are worried about the cost of your care or perhaps a loved one’s care, it can be helpful to talk to someone who has experience navigating the funding and organisation of care.

Age UK provides many services to help elderly people and has advisors across the UK who can listen and provide accurate information based on your situation.

As well as this, here at Online Mortgage Advisor, we are able to provide free, confidential and professional advice about the options that may be available to you.

Call Online Mortgage Advisor on 0330 818 7026 or make an enquiry here.