Funding Later-Life Care

For many families, the question of how to pay for later-life care arrives suddenly and unexpectedly. A fall, a hospital admission, or a diagnosis such as dementia can quickly raise difficult questions about what support is needed and how it will be funded.

With care costs rising and local authority funding thresholds remaining relatively low, many homeowners find themselves needing to fund care privately. As a result, more people are exploring whether equity release could help cover the cost of home care, property adaptations, or even short-term residential care.

In the right circumstances, equity release can provide a practical way to fund care. However, it is not suitable for everyone. Understanding when it may be helpful, when it may not be appropriate, and what alternatives exist is essential before making any decision. Sound financial advice at this time is crucial.

At Claire Nash Solicitors, we regularly advise clients and their families on the legal implications of equity release, helping them consider the long-term impact before committing to any arrangement.

The Growing Challenge of Funding Later-Life Care
Later-life care can be expensive, and many people are surprised by the level of costs involved.
According to Age UK, the average cost of residential care in England can exceed £800 per week, while nursing care may exceed £1,000 per week depending on the level of support required. Over the course of a year, this can amount to tens of thousands of pounds.

Local authority support is only available to those who meet strict financial criteria. In England, individuals with assets above £23,250 are usually expected to fund their own care. Because a property is often the largest asset someone owns, many homeowners quickly fall into the category of “self-funding”.

Families therefore often face difficult choices:

• Using savings or investments

• Selling the family home

• Relying on family contributions

• Exploring financial products such as equity release
  

For those who wish to remain living in their own home, equity release can sometimes provide an alternative to selling the property, at least in the short term.

What Is Equity Release?
Equity release allows homeowners aged 55 or over to access some of the value tied up in their property without needing to sell it immediately.

The most common form is a lifetime mortgage, where money is borrowed against the home. Interest is added to the loan over time, and the loan is usually repaid when the property is sold after the homeowner’s death or when they move permanently into long-term care.

Some plans allow homeowners to:

• Take funds as a lump sum

• Release money gradually through a drawdown facility

• Make voluntary repayments to reduce the accrual of compound interest
  

While equity release can provide financial flexibility, it is a significant financial commitment that requires careful consideration.

When Equity Release Can Be the Right Solution
While it is not appropriate for every situation, equity release can be helpful in certain circumstances.

When staying at home is the priority
Many people wish to remain in familiar surroundings for as long as possible. Equity release can help fund:

• Regular domiciliary care

• Live-in carers

• Home adaptations such as stairlifts, ramps or wet rooms

• Safety improvements that support independent living
  

In some cases, this can delay or avoid the need for residential care.

When income is limited but property value is high
A common situation is that someone’s pension income is relatively modest while their property has increased significantly in value over time.

Equity release can allow homeowners to access part of that value without selling their home, providing funds that can be used to meet ongoing care costs.

When families want to avoid selling the home immediately
Selling the family home during a health crisis can be emotionally difficult and may feel rushed.
Equity release can provide short-term financial breathing space, allowing families more time to consider longer-term arrangements without needing to sell the property straight away.

When care needs are temporary or transitional
In some cases, care needs may not be permanent. Equity release may help fund short-term support such as:

• Rehabilitation after a hospital stay

• Interim care while waiting for NHS Continuing Healthcare assessments

• Temporary care while longer-term plans are arranged
  

Some equity release plans allow funds to be released gradually, which can help limit the amount of interest that builds up.

When flexibility is important
Modern equity release products often include features designed to make them more manageable, such as:

• Optional monthly interest payments

• The ability to make voluntary repayments

• Drawdown facilities to control how much money is released

• No-negative-equity guarantees
  

These features can help reduce the long-term impact on the homeowner’s estate.

When Equity Release May Not Be the Right Option
Despite its potential benefits, equity release is not suitable in every situation.

When long-term residential care is likely
Equity release is designed for people who continue living in their home. If someone moves permanently into residential care, the loan will usually need to be repaid, typically through the sale of the property.
In these circumstances, selling the home directly may be a more straightforward option.

When the homeowner may qualify for local authority support
Accessing equity in a property can affect eligibility for local authority funding.
Releasing funds may push someone above the financial threshold for assistance, meaning they lose access to support they might otherwise have received.Obtaining legal and financial advice before proceeding is therefore of the upmost importance.

When preserving inheritance is a priority
Equity release reduces the value of the estate because interest builds up over time.

While many families accept this as the price of accessing funds when they are needed, others may prefer to protect the property as an inheritance for children or grandchildren. In these cases, alternative funding arrangements may be more suitable.

When there are underlying financial difficulties
Equity release should not be used to cover up wider financial problems such as unsecured debts or ongoing affordability issues.
Independent financial advice may help identify more appropriate solutions.

When mental capacity is uncertain
Equity release requires informed consent. If the homeowner lacks mental capacity and no Lasting Power of Attorney (LPA) is in place, the process becomes more complicated and may require involvement from the Court of Protection.

Planning ahead by putting an LPA in place can make future decisions much easier.

Regulation and Safeguards
Equity release products in the UK are regulated by the Financial Conduct Authority (FCA).

Many providers are also members of the Equity Release Council, which requires certain consumer protections. These include the no negative equity guarantee, meaning borrowers will never owe more than the value of their home when it is sold.

However, even with these safeguards, equity release remains a long-term legal commitment that should only be entered into after careful consideration.

Alternatives to Consider
Equity release is only one of several ways to fund later-life care. Depending on individual circumstances, families may also consider:

• Downsizing to a smaller property

• Renting out part of the home

• Deferred payment agreements with the local authority

• Using savings or investments

• Family contributions

• NHS Continuing Healthcare, where eligibility criteria are met
  

A solicitor can help explain how these options affect property ownership, inheritance, and long-term planning.

How a Solicitor Helps You Make the Right Decision
Equity release is a regulated financial product and a legally binding agreement. Independent legal advice is required before any arrangement can proceed.

A solicitor’s role is to ensure the homeowner fully understands:

• The long-term financial implications

• How interest will accumulate over time

• What happens if care needs change

• How the arrangement may affect inheritance and estate planning

• The homeowner’s rights and responsibilities
  

At Claire Nash Solicitors, we take the time to explain the process clearly, involve family members where appropriate, and ensure that any decision reflects the client’s wishes and best interests.

Taking a Thoughtful Approach to Funding Care
Equity release can be a valuable tool for funding later-life care, but it should always be approached with care and careful planning.

Every family’s situation is different. Health needs, financial circumstances, family dynamics and long-term goals all play a role in determining the right approach.

If you or a loved one is considering equity release to help fund care, obtaining clear legal advice can help ensure that any decision supports long-term wellbeing, independence and peace of mind.

Get in touch, we would be happy to have a chat.