Equity Release To Cover Astronomical Care Home Bills

How people are going to pay for their care in later life is becoming a much bigger issue because the average age of the British population is consistently on the rise. With new medicines and illness treatment discoveries coming every year, this on the one hand is a very good thing, however it is directly related to the rise in the average age of the British population.

One potential solution to this problem is equity release schemes which involve people releasing income that is locked in to their properties. The good thing about equity release schemes is that it doesn’t mean that a person needs to move properties or sell their home to free up the income in their property.

What is very interesting is that those with assets over £23,000 will have to fund their own care and it will not be covered by the NHS. There are exceptions to the rules such as people with assets under £23,000 but have high wages; they might still have to contribute to their care.

For younger people this is less of an issue as they can plan and prepare for later life in savings and in assets, however for older people this can be a very big problem and they can have a large shortfall in their financial position. The reason this is an issue for older people is that the average retirement income is circa £10,000 every 12 months and the cost of care is circa £35,000.

Also what financial experts have stated is that care is very much an unknown commitment and can be very open ended which means planning for it can be next to impossible because you do not know if you will need it for one year or for ten years.

So what it comes down to is 2 main options and those are whether they have adequate savings or investments that they can cash in to help fund their care or if they have assets tied up in property or land.

If they have property then they face the decision of selling their property and moving homes, however the other alternative is to do an equity release scheme which will allow them to free up cash using their property without the need to move homes.

In summary many older home owners who have no savings but do face large health care bills to pay then the equity release option does seem like a sensible choice to consider.