Pensioners should use the equity in their property to pay for their care bills, according to the Prime Minister’s director of policy*.
John Godfrey said that over the next ten years, the solution to the social care crisis lies in homeowners downsizing their properties or releasing some of their equity in later life.
Godfrey reportedly told an independent commission:
“On a ten-year view… equity release is going to be hugely important, because if you look at the amount of housing equity across the UK that is owned by people of post-retirement age, that is really where an awful lot of the money sits at the moment.”
“Can people either downshift or liberate some of that money through equity release to fund their living costs?” He asked.
Around one in ten people end up paying over £100,000 in care costs in later life, research has shown, with up to 40,000 homeowners a year being forced to sell their homes to foot their care bills.
Equity release to pay for care
By unlocking the money from your property using an equity release plan, single or joint homeowners can continue to receive and pay for domiciliary care in the comfort of your own home without any need to sell or downsize.
It can also be an enormous help for couples where one of them requires care in a residential home whilst the other does not. Equity release could enable couples to unlock the money needed for care fees, allowing the spouse to remain in their home until he or she either passes away or also moves into residential care.
The money unlocked with an equity release plan – also known as a lifetime mortgage – can be spent on anything you wish. You could use your property wealth to make home improvements, perhaps adapting your home for yourself or a loved one with mobility issues.
Flexible equity release plans
Equity release has come a long way in recent years, with today’s plans offering a plethora of options to homeowners aged 55 and over seeking a cash boost in retirement.
The majority of plans are fixed rate plans which guarantee the rate for life, meaning you never have to worry about fluctuating market conditions affecting your interest rate in the future. Alternatively, for those who feel sure that rates will remain low for many years to come, variable rate equity release plans are available too, offering record low rates.
Interest-payment plans are available which enable you to service the interest on your plan, either to minimise or entirely prevent interest from accruing on the loan. Payments can be made entirely voluntarily, so you can choose to allow the interest on your equity release plan to start rolling-up at any time.
There are also enhanced equity release plans which enable you to access a larger percentage of your home’s value. These plans are available to homeowners who smoke, or have one on an extensive list of qualifying health conditions, including high blood pressure and diabetes, for example.
Speak to a specialist
With lenders scrambling to offer some of the lowest rates on record, now could be an ideal time to unlock the equity from your home to boost your retirement income, make home improvements or perhaps help with living costs.
With so many plan options to choose from, it is essential to seek the guidance of an independent specialist in retirement lending before making a decision.
Your Bower specialist will take the time to explain all the advantages and disadvantages of each type of plan so you can make an informed choice. They will also explain how equity release will reduce the value of your estate and will reduce the amount of inheritance you leave.
Speak to us today to arrange your free, no-obligation initial consultation on [tel].
*The Observer 06 August 2016
