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Using a Lifetime Mortgage to Pay for Care at Home

This guide was last updated 4 February 2025

A lifetime mortgage can be a great option if you want to use the value of your home to pay for care, all while staying in the comfort of your own house. Here’s a simple, step-by-step guide on how this works:

  1. What is a Lifetime Mortgage?

A lifetime mortgage is a type of equity release scheme that allows you to borrow money against the value of your home. The good news is, you don’t need to make monthly payments. Instead, the loan and the interest are paid back when you pass away or move into long-term care.

  1. Check if You Qualify

Before diving in, you’ll want to make sure you meet some basic requirements:

  • Age: Typically, you’ll need to be at least 55 years old (though some providers might require you to be 60+).
  • Home Ownership: You need to own your home, and it should be in good condition. The property should also be worth enough to cover the loan and interest over time.
  • Care Needs: The loan can be used to pay for care now or in the future, whether that’s help with day-to-day tasks or live-in care.
  1. Understand the Costs

There are a few costs to keep in mind:

  • Interest: The interest on the loan will compound, meaning it’s added to the loan balance over time. The longer you live in your home or need care, the more the loan will grow.
  • Fees: You may face setup costs, legal fees, and valuation fees from your provider.
  • Repayment: The loan, along with any accrued interest, will be repaid when your home is sold after your death or move into long-term care.
  1. Speak with a Financial Advisor

Before making any decisions, it’s a good idea to talk to a financial advisor who specializes in equity release. They can help you:

  • Figure out if a lifetime mortgage is the right option for you.
  • Compare providers and interest rates to find the best deal.
  • Understand the long-term effects on your finances and your estate.
  1. Choosing the Right Provider

When picking a provider, think about:

  • Interest rates: Do you want a fixed rate (which is stable) or a variable rate (which might change over time)?
  • Flexibility: Some plans allow you to make partial repayments or pay off the loan early, although this could come with fees.
  • Additional features: Look out for plans that offer a “no negative equity guarantee,” which means you won’t owe more than the value of your home, even if the market value drops.
  1. Get Independent Legal Advice

You’ll also need to consult with a solicitor who’s independent of the mortgage provider. They’ll make sure you fully understand the terms and conditions, especially how the loan might affect your estate.

  1. Use the Funds for Care Costs

Once you’ve secured your lifetime mortgage, you can use the funds to cover various care-related expenses, including:

  • Home care: Paying for a professional to help with daily activities like personal care, medication management, or even light housekeeping.
  • Live-in care: If you need someone to live with you and provide around-the-clock support.
  • Assistive technologies: Funds can also be used to improve your home’s safety, such as adding smart devices or medical equipment.

You can choose to receive the funds as a lump sum or in smaller, regular payments, depending on what works best for you.

  1. Keep an Eye on the Loan and Interest

Although you won’t need to make monthly payments, it’s important to stay aware of how the loan balance grows over time. As interest accumulates, the total amount you owe will increase. Periodically review your financial situation to make sure you’re comfortable with the impact on your home’s equity.

  1. Plan for the Future

A lifetime mortgage can reduce the inheritance you leave behind for your loved ones, as the loan will be repaid from the sale of your home. It’s a good idea to have an open conversation with your family about this so everyone is on the same page.

  1. Explore Other Options

If you’re not sure a lifetime mortgage is the right fit, there are other ways to pay for care:

  • Personal savings: If you have savings or other investments, you might be able to use those to cover costs.
  • Local authority funding: Depending on your needs and circumstances, your local council might help with care costs.
  • Other equity release plans: There are different types of equity release products, such as a home reversion plan, which might suit your situation better.
  1. Reassess Your Care Needs

As your care needs change over time, you may need to adjust your funding. Stay in touch with care professionals and keep reviewing your options to make sure your needs are met.

A lifetime mortgage can be an excellent way to access the value of your home and fund care while staying in your own space. Just make sure to do your research, consult with financial and legal professionals, and regularly reassess your needs. By taking these steps, you can confidently use this option to ensure that your care needs are taken care of in the long run.

Written by Lousie Stevens

Louise grew up in a quaint village in the Kent countryside, where she lived with her grandparents and her aunt. Much of her childhood was spent riding and caring for her ponies, nurturing her love for animals and the outdoors. Sharing a passion for judo with her father, they enjoyed many father-daughter moments competing together. Louise's dedication to the sport led her to become a British judo champion for three consecutive years. Her love for an active, outdoor lifestyle continues today as she enjoys walking her dog, Bella, with her partner. Louise has been a valued member of the Coreco family for over five years, bringing more than 15 years of experience as an advisor. With her CEMAP and CERER qualifications, she is exceptionally equipped to guide clients through the mortgage process. Louise is not just any mortgage advisor—she's an award-winning professional! She received the Best First-Time Buyer Broker award at the British Mortgage Awards in 2018. Her expertise is evident in her specializations: assisting first-time buyers, and self-employed individuals, and leading the Later Life lending proposition, Coreco Lifetime. Louise's passion for helping people is evident in the dedication and care she brings to her work, making her an invaluable asset to our team and to her clients.

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