Long Term Care & Equity Release

Average life expectancy in the UK is now well over 80* and children born today have about a 1 in 3 chance of celebrating their 100th birthday*. Coupled with this rapid rise in life expectancy is the increase in the quality of life for many people in their latter years. In general, older people are healthier, more active and demand more from life than ever before. We think this is great news and to be welcomed but it does provide challenges for those thinking about how they will plan for their older age.

We recognise the later years in life can be an uncertain time. They can ensure your finances or those of a loved one are one less thing to worry about whilst you concentrate on maintaining your health.

Long Term Care

Many people are now living much longer lives than ever before due to advances in healthcare, diet and our general standard of living.

One of the biggest concerns for many people is the cost of long-term care. This covers care at home as well as residential homes. As society ages, this type of care is becoming more prevalent as many people don’t wont to become a significant burden on their family in their older age.

The cost of private long-term care can often be significant and out of reach for those who have not put financial plans in place earlier in life. Without adequate planning, many people are often faced with selling their home in order to pay for their care which can cause significant emotional strain and worry.

With proper forward planning, you can be best placed to fund any long-term care you need, whether this is through long-term care insurance, savings, pensions, releasing equity from your home or another investment vehicle. We can also help you if you have a more pressing need for a relative who needs immediate or upcoming care and help you work out how best this can best be funded. We also help our clients understand any state benefits they may be entitled to and how to maximise their entitlement. This is a rapidly changing and complex area where our expertise and often provide significant benefits.

Equity Release
Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.

There are two equity release options:

Lifetime mortgage

You take out a mortgage secured on your property provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family. You can choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.

Home reversion

You sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.

*Source – Office of National Statistics, UK

Useful Resources

Financial Health Check Tool

Cashflow Planning

Tracking down your pension pots