Long Term Care
Meeting the cost of residential and nursing care in old age is a growing issue for many people in the UK. As life expectancy continues to lengthen, more of us can expect to require some form of long term care.
While the State can help with some costs, eligibility for help is limited and many people find the value of their income and/or assets take them over the threshold for that State support – so it is important to understand the range of financial options available to you.
Unfortunately, 1 in 4 people who fund their own care run out of money because they don’t consider all their options or take proper advice.*
*source: *LGIU Independent Ageing 2012
A big problem is that nobody can predict how long care will be required and therefore plans need to be made to pay the fees. Running out of money will mean that the person has to rely on the local authority to fund their care and, there are no guarantees the local authority will wish to maintain the same payment levels. Unless the family is able to make up the difference, this can result in compromises having to be made, for example, size or outlook of the room or moving to an alternative care home. In addition, using up all the money to pay for care means that there is no legacy to leave to loved ones.
However, with financial planning it may be possible to ensure that care can be funded for as long as required, whilst safeguarding as much capital as possible. It is therefore important to speak to a Specialist Care Fees Adviser.
Paying for care – understanding your options:
- Using income or a contribution from family.
- Using new or existing investments to generate growth and income to help fund care costs.
- Care Fees Plans (also known as Immediate Needs Annuities). These are specialist insurance plans which are designed to convert capital into income to help pay for fees. In return for a one off lump sum payment, a guaranteed income is paid for life. There is therefore no risk that the income will ever cease.
Like many people in or near retirement, you may find you’re well off on paper but less well off in practice. It’s not that you don’t have the money – it’s just that most of it is tied up in your home. This can be a dilemma if you need to free up some of this wealth but don’t want to sell your home.
What is a Lifetime Mortgage?
A lifetime mortgage is a special type of mortgage for people in or near retirement that offers a way of releasing some of the equity in their home. Like any other mortgage, it’s a loan secured against the property and interest is accumulated, but the difference is that you don’t have to repay any of the loan or interest during your lifetime. The loan is generally repaid upon death or if you move out of the home. The interest rate you pay can be for the lifetime of the mortgage. A lifetime mortgage includes a no negative equity guarantee and there will be restrictions on the amount of borrowings.
You can use the money however you wish: If you’re not as mobile as you used to be, you could use the money to adapt your property to make your life more comfortable.
As part of any advice on Lifetime Mortgages, we would explore all options available to you as a Lifetime Mortgage can impact on state benefits, there are restrictions on properties eligible, and will reduce the amount of inheritance that can be left.
Please contact us on 01489 574355 or via the Contact page on our website, to arrange a free, initial no obligation consultation at our office in Park Gate, Southampton, Hampshire.
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.