Using equity release to fund long term care

There have been many conversations over the years as to how to fund adult social care especially as people are living longer with multiple or complex needs. It is estimated that around 75 per cent of people will require some social care in their lifetimes with 10 per cent incurring costs of over £100,000*. However over one in five (22%) of UK adults are unaware that many people will have to contribute to social care costs in later life+ and as the UK continues to see a rapidly ageing population, this percentage is predicted to rise.**.

Housing wealth, which often represents the largest asset people hold (the average UK house price in November 2020 was £249,633) might support the elderly to meet their care costs. Almost three in four (72%) want to live in their property as long as they can and this ‘home for life’ mentality grows stronger with age – rising to 77% among those aged 65-74 and 89% beyond 75. ***

The Pensions Regulator has expressed concern that with 42% of pension pots being raided at ‘unsustainable’ rates, how current and future retirees will be able to fund any care provision in later life. 

Using property to fund later life needs

Property, therefore, has an important role to play in supporting those who wish to live longer independent lives in their own homes. 

Research by the Equity Release Council shows that more adults are considering the use of their property to fund their needs in later life. Many older people have the vast bulk of their savings tied up in property and do not want to move so finding funding solutions to help people stay in their homes is a priority and, given the state of over-50s property ownership, housing equity is a natural conclusion.

Research by Canada Life released in October 2020 highlighted a combined UK total of £591 billion of unreleased equity which would potentially play a vital role in funding care in the future, as well as pension planning.

Those that do explore equity release will find a market that has grown immensely over the past few years which has also become more flexible as the market has adapted to changing customer needs.

The option of unlocking property wealth in later life can help people meet care needs in a range of individual circumstances, supported by robust advice processes to ensure good customer outcomes.

Please contact your Mortgage Consultant to find out more about any of the items raised in this article.

+Independent research on behalf of the Equity Release Council, 2021
*Key facts and figures about Adult Social Care, 2019
**Commission on Funding & Care Support
*** Equity Release Council, Beyond Bricks and Mortar 2019
****Laing & Buisson, 2018

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.