abdcare blog

IS EQUITY RELEASE A GOOD WAY TO FUND THE COST OF LONG TERM CARE?

04.01.2019

• We asked Andrew Douglas, Partner at Awdry Bailey & Douglas Solicitors who specialises in elderly care, for his views on this issue?

What is Equity Release? It is a financial arrangement whereby financial providers allow homeowners over the age of 55 to turn capital in their homes into tax free cash to either buy an income or provide a lump sum for the purpose of funding long term care costs or to spend in whatever other way they wish.

How is the equity in your home turned into cash? The provider agrees to provide a capital sum in return for you entering into either a lifetime mortgage or selling to them all or part of your property subject to you having the right to live in the property for life or as long as you need.

Is Equity Release an expensive option? Yes, it is sometimes called the option of last resort. That said it is an option which is now considered to be more mainstream. Lifetime mortgages often start at 4-5%. If your property is sold to the provider it is often for less than the market value. There are then arrangement fees plus legal and valuation fees.

Should you seek specialist advice? Yes, always use an advisor who has a specialist Equity Release qualification. Also make sure both the advisor and the provider are members of the Equity Release Council and regulated by The Financial Conduct Authority.

Is Equity Release the only way of funding long term care fees? No, always remember to claim your age related DWP benefits, see whether the state will help if your other capital savings are less than £23,250 or you maybe entitled to NHS Continuing Health Care. You can ask your family to help out. In other words do not rush into an Equity Release arrangement until you fully understand the product and are aware of all other options.

• To know more and for a free appointment to find out answers to the questions that need answering email Andrew Douglas or his team on ajd@awdrys.co.uk or call us on 0800 072 8636.
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