Using Equity Release to Fund Care: A home can provide shelter, stability and a sense of independence. In later life, it may also become part of a wider plan for meeting care needs.
Using equity release to fund care may provide money for home carers, adaptations, specialist equipment or other support. However, it is not a complete care-funding solution for every homeowner.
The practical question is not simply whether money can be released. It is whether the arrangement remains suitable as care needs, living arrangements and costs change.
Can You Use Equity Release to Fund Care?
Yes, equity release can sometimes help fund care, particularly while you continue living in your home.
The money might be used for:
- Regular care visits at home
- Home adaptations
- Mobility equipment
- Respite care
- Private therapies
- Additional support beyond local authority provision
- Creating a reserve for future care costs
A lifetime mortgage is secured against your home. Interest may roll up if you make no payments. This increases the amount owed over time.
The plan will normally become repayable when the last borrower dies or moves permanently into long-term care.
Before proceeding, consider council support, NHS funding, savings, income, insurance, downsizing and family assistance. Regulated equity release advice is required.
What Does Using Equity Release for Care Mean?
Equity release allows an eligible homeowner to access part of their property’s value without immediately selling the home.
The most common form is a lifetime mortgage. This is a loan secured against the property. You remain its legal owner.
Money may be released as:
- One lump sum
- Several smaller withdrawals
- A combination of both
Using the money for care does not change the underlying mortgage rules. The loan remains secured against the property. Interest and charges still apply.
The purpose of the borrowing does matter during the advice process. An adviser must understand the expected care costs, how long they may continue and what alternatives are available.
What Types of Care Could Equity Release Help Fund?
Care is not one fixed service. Its cost and structure may change as health, mobility or family support changes.
Care in your own home
Released funds could help pay for carers who visit your property. Support might include washing, dressing, preparing meals or taking medication.
The money could also fund overnight assistance or private care beyond any council-funded provision.
Remaining at home can preserve familiarity and independence. However, the property must remain suitable for the person receiving care.
Home adaptations
Some homeowners use property wealth to make their home safer or easier to use.
Possible work includes:
- Installing a stairlift
- Creating an accessible bathroom
- Widening doorways
- Adding ramps or handrails
- Moving essential rooms downstairs
- Improving heating or insulation
- Creating space for a resident carer
Grants or council help may be available for some adaptations. These possibilities should be checked before borrowing.
Specialist equipment and private services
Equity release might also support:
- Mobility equipment
- Adjustable beds
- Personal alarms
- Private physiotherapy
- Occupational therapy
- Respite arrangements
- Transport to medical appointments
The cost should be considered alongside any continuing maintenance or replacement expenses.
Residential or nursing care
This area requires greater caution.
An existing lifetime mortgage will usually become repayable when the last borrower moves permanently into long-term care. The property may then need to be sold.
Taking a new lifetime mortgage may not be possible when every homeowner intends to leave the property permanently.
The position can differ for joint homeowners. For example, one person may enter care while the other continues living at home.
Product conditions and occupancy rules must be checked carefully. The Equity Release Council provides further guidance on equity release and long-term care.
How a Lifetime Mortgage Could Provide Care Funding
A lifetime mortgage is a long-term loan secured against your main residence.
You can usually remain in the property, provided you follow the mortgage conditions. These normally include maintaining the home and keeping it insured.
Lump-sum release
A lump sum may suit a defined cost, such as major adaptations.
However, interest is usually charged on the full amount from the date of completion. Releasing more than necessary could unnecessarily increase long-term costs.
Drawdown facility
A drawdown plan provides an initial amount and a reserve for later withdrawals.
This may be useful where care costs will arise gradually. Interest is normally charged only after money is withdrawn.
The reserve is not guaranteed indefinitely. Future withdrawals remain subject to the lender’s terms and the available facility.
Optional payments
Some plans permit voluntary interest or capital payments.
Making payments could reduce the effect of compound interest. However, the permitted amount and frequency vary between products.
Payments must remain affordable. Care funding should not depend on maintaining payments that may become difficult later.
Why the Timing of Care Matters
Care needs can develop gradually or appear suddenly.
A plan arranged before care begins may have different practical consequences from one considered after a permanent move.
An adviser will need to establish:
- Who owns and occupies the property
- Whether care will be provided at home
- Whether a move into residential care is temporary or permanent
- Whether another borrower will remain in the home
- The expected cost and duration of care
- Whether the home will remain suitable
- Whether an attorney or deputy is involved
- Whether mental capacity may affect decision-making
A person must understand the transaction and give valid instructions. Where an attorney is acting, the lender and solicitor will require suitable legal authority.
The Cost of Funding Care Through Equity Release
Money released from a lifetime mortgage is borrowed money. It is not income from the property.
Where interest is not paid, it is added to the loan. Future interest is then charged on the increased balance.
For illustration only, a £50,000 release at 6% compound interest would grow to approximately:
| Time since release | Illustrative balance |
|---|---|
| 5 years | £66,911 |
| 10 years | £89,542 |
| 15 years | £119,828 |
These figures are examples, not quotations. Actual rates, fees and outcomes will differ.
A personalised illustration should show:
- The amount released
- The interest rate
- Whether the rate is fixed
- How the debt may grow
- Advice and legal fees
- Possible early repayment charges
- The estimated effect on the remaining property value
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
Could Equity Release Affect Benefits or Care Support?
It can.
Money held in a bank account may be treated differently from value held within your home. Releasing a large lump sum can therefore affect some means-tested benefits or financial assessments.
The effect depends on:
- The benefit or support being claimed
- How much money is released
- Whether it is spent immediately
- Whether it remains as savings
- Household income and capital
- The applicable national and local rules
Before releasing money, request a care needs assessment and financial assessment where appropriate. GOV.UK explains how to obtain care and support through your local council.
Care funding rules differ between England, Scotland, Wales and Northern Ireland. Local authority practices may also differ.
Alternatives That Should Be Considered First
Equity release advice should not begin and end with a mortgage quotation.
The FCA’s equity release advice rules require advisers to consider suitability, relevant disadvantages and alternative ways of raising funds.
Important alternatives include the following.
NHS Continuing Healthcare
Some adults with complex, primarily health-related needs may qualify for NHS Continuing Healthcare.
Eligibility is based on assessed needs rather than a particular diagnosis. When awarded, it can cover the full cost of an eligible care package.
Read the official guidance on NHS Continuing Healthcare.
Local authority support
A council may assess the person’s care needs and finances.
Depending on the assessment, it may contribute towards eligible care. The person may still need to make a contribution.
Deferred payment agreement
A deferred payment agreement is generally associated with permanent care home costs.
The local authority pays agreed care fees as a loan secured against the property. The debt is usually repaid later from the estate or property sale.
Eligibility, interest and fees apply. It is not the same as a lifetime mortgage.
Savings and retirement income
Savings, pensions or other income may meet part of the cost without placing a new charge on the home.
However, using all liquid savings could leave little money for emergencies. A balanced cash-flow plan is important.
Downsizing
Moving to a less expensive or more accessible property could release capital without creating mortgage interest.
It may also reduce maintenance and care-delivery difficulties.
However, moving costs, suitable housing and emotional considerations must be included.
Our guide to planning for retirement explains why property, income and future needs should be considered together.
Other later-life mortgages
Some homeowners can make monthly payments and may qualify for another borrowing structure.
A retirement interest-only mortgage or standard mortgage could be considered. These options usually require an affordability assessment.
Read about the wider later-life lending options before assuming equity release is the only route.
Connect Mortgages also provides a broader guide to equity release mortgages and later-life borrowing.
When Might Equity Release Be Considered?
Equity release may be considered where:
- The homeowner wants to remain at home
- The property is suitable for ongoing care
- Care costs have been assessed
- Other funding routes have been checked
- Sufficient property equity is available
- The expected borrowing is sustainable
- The effect on benefits has been reviewed
- The effect on inheritance is understood
- The homeowner accepts the long-term cost
- The recommended product meets the expected care plan
Suitability depends on the whole situation. Age and property value alone are not enough.
When Might It Be Less Suitable?
It may be less suitable where:
- The last homeowner will soon leave permanently
- Care costs are uncertain or likely to rise sharply
- The home is no longer suitable
- A council or NHS funding route remains unexplored
- The money would remain unused in savings
- Means-tested benefits could be reduced
- Downsizing is already planned
- The release would use most available equity
- Family members rely on the property for accommodation
- The applicant cannot understand or authorise the transaction
- A lower-cost funding method is available
Equity release can turn long-held property value into care funding today. It can also reduce choices available tomorrow.
Both outcomes deserve equal attention.
Questions to Ask an Equity Release Adviser
Before making a decision, ask:
- Can the plan continue if one homeowner enters care?
- What happens if the last borrower leaves permanently?
- Would a lump sum or drawdown facility be more suitable?
- How could interest increase the balance?
- Are voluntary repayments permitted?
- Could the release affect benefits or council support?
- What care-funding alternatives have been considered?
- Can the plan move to another property?
- What property conditions must be followed?
- How much equity could remain after 10 or 15 years?
- What happens if care costs are higher than expected?
- Should my family, attorney or solicitor be involved?
There are many possible reasons for using equity release. Care funding requires particular attention because needs can change over time.
Using Property Wealth Without Losing Sight of Its Purpose
A home has both financial and practical value.
It may provide the money needed to support greater independence. Yet it may also be the place where that independence is protected.
Good planning considers the house, the person and the care plan together.
The aim should not be to release the largest available amount. It should be to identify the smallest suitable commitment capable of meeting a clearly defined need.
Speak to an Equity Release Adviser
Connect Lifetime can help you examine whether equity release could form part of a care-funding plan.
An adviser can explain:
- How lifetime mortgages work
- Possible lump-sum and drawdown structures
- Interest and repayment arrangements
- The effect of moving into long-term care
- Alternatives that should be considered
- Possible effects on benefits and inheritance
- The information needed before applying
You should also seek care, legal, benefits or tax guidance where the decision extends beyond mortgage advice.
Contact Connect Lifetime to arrange a conversation.
Frequently Asked Questions
Can equity release pay for care at home?
Yes. An eligible homeowner may use released money for carers, adaptations, equipment or other support at home. Suitability depends on the expected costs and available alternatives.
Can equity release pay care-home fees?
It may help in some circumstances. However, a lifetime mortgage normally becomes repayable when the last borrower moves permanently into long-term care.
A new plan may not be available if every homeowner intends to leave the property permanently.
What happens if one joint borrower enters care?
The mortgage may continue while the other borrower remains living in the property as their main residence. The exact position depends on the product terms.
Is a drawdown lifetime mortgage better for care costs?
A drawdown facility may suit costs arising gradually because interest normally begins only when each amount is withdrawn.
It is not automatically better. Availability, rates, withdrawal limits and future needs must be assessed.
Does equity release affect a local authority care assessment?
It can. Money released and retained as capital may affect means-tested support. Obtain relevant benefits and care-funding guidance before proceeding.
Should I use equity release before applying for council help?
Not necessarily. Request a needs assessment and financial assessment first. NHS funding and local authority support should also be considered.
Will using equity release reduce my inheritance?
Usually, yes. The mortgage balance and any accumulated interest are repaid from the property or estate. This normally leaves less for beneficiaries.
Is equity release advice required?
Yes. Equity release is a regulated area. A qualified adviser must assess whether the proposed transaction is suitable for your circumstances.
Important information
A lifetime mortgage is a loan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits.
The loan and interest are normally repaid when the last borrower dies or moves permanently into long-term care.
To understand the features and risks, ask for a personalised illustration.
Care-funding rules and public support differ across the UK. Seek appropriate care, legal and benefits guidance before making a decision.
