Will I need to sell my home to pay for care?
This content is for information purposes only and should not be taken as financial advice. Every effort has been made to ensure the information is correct and up-to-date at the time of writing. For personalised and regulated advice regarding your situation, please consult an independent financial adviser here at Castlegate in Grantham, Lincolnshire or other local offices.
As we age, the need for care typically increases. Perhaps you may need professional care within your home. Or, maybe you enter a residential or nursing home.
Naturally, care needs to be paid for – either by the state, individuals or both. A common question, therefore, is whether you may need to sell your home to cover the costs of care.
Below, our Grantham financial planners offer a brief overview of how the UK care system works, the typical costs in 2023 and how to plan ahead for these.
To discuss your financial plan with us, please get in touch to arrange a no-obligation financial consultation, at our expense:
01476 855 585
info@casfin.co.uk
How does the UK care system work?
The NHS offers British residents access to many healthcare services which are free at the point of use. Long-term care in the UK, however, is a blend of health and social care. As such, care is not necessarily free, at the point of use, for people in old age.
As a general rule, the NHS may pay for your care in certain (mostly healthcare-based) cases – e.g. Hospital Based Complex Clinical Care in a hospital. If you will mostly need a nurse or medical attention, rather than a carer, then you are more likely to qualify for this funding.
NHS Funded Nursing Care may be available to specific people in a care home. Unfortunately, there is often little certainty about what type of care you might need in later life (and if you will secure state funding).
It helps, therefore, to have your own care plan in place, ready to look after yourself.
What is the cost of long-term care in the UK?
Care is not cheap. In 2023, the average monthly cost of residential care is £3,290 and for nursing care in a care home the average is closer to £4,160. Over one year, therefore, it is hardly surprising that costs can run over £27,000, £39,000 or even over £55,000.
The precise cost varies depending on various factors including the location, quality and size of the care home. If 24/7 nursing care is required on-site, then this drives the cost up too.
Local council funding may be available to residents in England if an individual passes the financial assessment. If your savings are above £23,250, then you will likely need to cover the full cost of your own care.
If you have £14,250 – £23,250 in savings, then the council may help with some of the costs (e.g. meals, carers and transport). If you qualify for maximum funding from your council (your savings are below £14,250), then you will still need to pay some of your own income towards the cost.
How to avoid needing to sell your home
One important rule to remember is that the value of your home is not counted in the local authority’s financial assessment if you need care in your own home. This can help certain individuals keep under the £23,250 or £14,250 limits which allow for local council funding.
Also, note that your property’s value is also not counted if you move into a care home, but someone like a partner, dependent or frail relative keeps living in your home. Your home will also not be included in the calculation if you just need temporary care.
If you do not meet these conditions, or your circumstances change (e.g. your cohabiting child goes over the age of 18 while you are in care), then you may not need to immediately sell your home to cover your care costs. The council may agree to a “deferred payment agreement”.
In this arrangement, the council would keep paying for your care fees and reclaim the costs when you die (taking them from your estate). Or, it would take them from your proceeds if your property is sold before your death.
What other options do you have? One strategy is to try and stay in your home for as long as you can, if you need care. Yet this may not always be possible. Another idea is equity release.
This option involves releasing money tied up in the value of your home. This can help people release funds needed to pay for care, without selling their property. However, equity release leaves less wealth to pass down to your beneficiaries at the time of inheritance.
Another idea is to try and generate an income from your home to help pay for your fees. Getting a tenant could provide sufficient monthly funds for your care needs. However, there can be complex tax implications with this approach. Also, beware of the hidden costs involved such as management fees, property maintenance and periods of non-occupancy.
A final option is to buy an “immediate needs annuity” to pay for your care, until this is no longer required. This could be a viable option if you end up needing care for a long time. However, it will likely be expensive if you die shortly after taking out the policy.
Invitation
If you are interested in discussing your own financial plan or care strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:
01476 855 585
info@casfin.co.uk
