Facing the possibility of long-term care can be a daunting and emotionally taxing experience. Plus, the complexity of any financial implications can add further stress to an already difficult situation. To help you better prepare for your future, or that of a loved one, we’ve created this guide to address the common concerns around care home fees and property.
The cost of care can vary significantly depending on the type of care needed. Whether you pay towards care, and how much, is calculated using a means-tested assessment. According to Age UK (External), if your capital exceeds £23,250 you’ll likely be required to pay for your care.
If you’re unable to pay for care, your local authority will be responsible for paying, or at least contributing towards it. This could include a carer coming to your home, residential care, or nursing homes.
How much you need to pay towards care depends on a variety of factors, including how much you have in savings, your income and whether you own your home. If your home is included in the assessment, it won’t be considered for the first three months. This allows time for you to decide what to do with the property if the care is long-term.
However, there are some scenarios where your home won’t be included in the means-tested assessment, such as:
As part of the means test, some belongings may be exempt from the assessment – for example, personal items, occupational pensions, and household furnishings. You can check what is and what isn’t exempt with your local authority.
It’s important to be honest about your situation. Any attempt to hide assets, such as gifting money or property to family members, could be viewed as a deliberate deprivation of assets.
The homeowner remains legally responsible for making mortgage payments, even when residing in a care home. Therefore, you must plan and adjust your finances accordingly. Some people may opt to sell their homes to pay for the cost of living in a care home. If your home is still mortgaged, then selling your home would pay off the mortgage loan.
When only one homeowner moves into care, the remaining homeowner is typically responsible for continuing mortgage payments. If this is likely to be difficult, Marsden customers can contact us online or by calling 01282 440500 and a member of our team will be happy to discuss your options with you.
It’s vital to inform your mortgage lender about entering care to discuss your options and potential adjustments to your mortgage agreement. Additionally, inform your solicitor or legal advisor and any power of attorney you may have appointed.
While your home may be included in the means test, selling isn’t always necessary and you cannot be forced to sell your home. However, many people may have built significant equity in their homes by later life and therefore opt to sell their property to cover care home fees.
There are a number of ways you could avoid selling your house to pay for care in your golden years, which we’ve outlined below. Please note that we highly recommend seeking professional financial and legal advice before making any decisions on the following options.
If you’re moving into a care facility but want to keep your home, then you could rent out your property and use the income to pay for care. However, if your home is mortgaged, then you’ll need to check your terms, as you may not be allowed to rent out your property under your current mortgage agreement.
You also need to factor in whether the rental income will cover the care home costs in addition to any monthly mortgage repayments and letting management fees.
The local authority deferred payment scheme (External) could be another option. If you have savings below the £23,250 threshold but you have equity in your home, some local authorities may pay for your care in full. However, this is usually paid back from the proceeds of the sale of your property in the future.
If you’re considering at-home care, then a Later Life mortgage could be an ideal solution. With our Later Life mortgages, you could remortgage your home and borrow additional funds to cover care-related costs. This product is designed specifically for those aged over 55 and allows you to borrow up to 60% loan-to-value (LTV).
Other debts, such as credit cards or loans are usually not considered when assessing your ability to pay for care. However, managing these debts alongside your care costs is crucial for your overall financial wellbeing. For help organising your finances, take a look at our money management guide.
If you have questions or concerns about your Marsden mortgage, you can speak to us directly by calling 01282 440500. Additionally, the following websites could provide useful information for navigating later life milestones and managing your finances.
Remember, planning and seeking professional advice is crucial to navigating the complexities of entering care and protecting your assets.
How to budget: A guide to money management and creating a household budget using the 50-30-20 or 70-20-10 budget rules.
Find everything you need to know about mortgage assumption and dealing with the estate after a loved one has passed in our guide.
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