Once all other options have been exhausted and equity needs to be accessed from the home there are a number of options, including:

Renting the Property

By itself, rental income is not usually sufficient to pay a care fee shortfall. However, in combination with investment and savings income, a deferred payments agreement or a first charge immediate care plan, it can sometimes work. However, time and money need to be spent on maintenance and insurances, and allowances have to be made in particular for periods of vacancy and tenants in default.

Selling the Property

This is often the more prudent option for someone living alone. However, it is often difficult to sell in the current climate. Two sales options include:

Equity Release

There are number of ways that this can be done, including lifetime mortgages and home reversion plans. The former can include rolled up or paid interest, the latter involves selling part of the home to a provider. However, if someone was living alone, most providers will not allow equity release on a property if the planholder goes into care.

An illustration should be ordered from equity release providers via specialist independent financial advisers to outline the benefits, terms and costs.

A First Charge Immediate Care Plan

One Immediate Care Plan provider can now take the premium via a charge on property, for those who cannot or do not wish to sell their homes, with interest on the loan rolling up and a no negative equity guarantee. The house can be put on the market with much less urgency, or rented out if appropriate. This is often a more prudent option than deferred payments if life expectancy is longer.

Michael Migan BA (Hons)
Care Funding Manager
Care Fees Advisers
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