Equity release to pay for care fees
Some families look at equity release to unlock money from a home to help pay for care. This guide explains how it works, when it can help and the risks involved.
Equity release lets a homeowner aged 55 or over unlock tax-free cash from their home without selling it, usually through a lifetime mortgage repaid when the home is sold. It can help fund care that is received at home, but it is rarely suitable once someone moves permanently into a care home, because the property is then usually sold anyway. Equity release is FCA-regulated, carries real risks, and must be arranged through an authorised adviser.
At a glance
- What it isUnlocking cash from your home without selling
- Most common typeLifetime mortgage
- Minimum ageUsually 55
- Best fitCare received at home, not a permanent move
- RepaidWhen the home is sold, often after death
- RegulationFCA-regulated; authorised advice required
What is equity release?
Equity release is a way for older homeowners to unlock some of the value tied up in their home as tax-free cash, without having to move out or sell. The most common form is a lifetime mortgage, where you borrow against the home and the loan, plus rolled-up interest, is repaid when the home is eventually sold, usually after death or a move into permanent care.
Equity release is regulated by the Financial Conduct Authority, and you can only take out a plan through an FCA-authorised adviser. We provide information here and can refer you to an authorised specialist. We do not give regulated advice. Never arrange equity release without authorised advice.
When can equity release help with care?
Equity release is most relevant when someone wants to stay in their own home and pay for care there, such as carers visiting or live-in care, rather than moving into a care home. In that case it can free up money from the home while the person continues to live in it. Once someone moves permanently into a care home, equity release is usually not the answer, because the home is generally sold or let, and a deferred payment agreement is often more appropriate.
- May help: paying for care received at home while you continue to live there
- May help: adapting a home so someone can stay there longer
- Rarely helps: funding a permanent care home move, where the home is usually sold
- Consider instead: a deferred payment agreement, or an immediate needs annuity
The risks to weigh
Equity release is a long-term commitment with significant downsides that an authorised adviser will talk through in full. Because interest rolls up, the amount owed can grow quickly, reducing what is left for your estate.
| Risk | Why it matters |
|---|---|
| Rolled-up interest | The debt can grow quickly and reduce your estate |
| Effect on benefits | Releasing cash can affect means-tested benefits and council funding |
| Early repayment charges | Repaying or moving early can be expensive |
| Less to pass on | It reduces the inheritance left to family |
Getting it right
Because equity release is irreversible in practice and affects your estate and any means-tested support, it should only be considered after full FCA-authorised advice that compares it against the alternatives. Reputable advisers and plans follow Equity Release Council standards, which include a no-negative-equity guarantee so you can never owe more than the home is worth. We can refer you to an authorised specialist who will assess whether it suits your circumstances.
Equity release to pay for care fees: common questions
Can I use equity release to pay for care?
It can help fund care received at home while you continue to live there, by unlocking tax-free cash from the property. It is rarely suitable for funding a permanent care home move, because the home is usually sold then. Take FCA-authorised advice before deciding.
How does equity release work?
An older homeowner unlocks cash from their home, most commonly through a lifetime mortgage. The loan plus rolled-up interest is repaid when the home is sold, usually after death or a permanent move into care. You stay in the home in the meantime.
What are the risks of equity release for care?
Interest rolls up so the debt can grow quickly, it can affect means-tested benefits and council funding, early repayment charges may apply, and it reduces the inheritance you leave. An authorised adviser will explain these against the alternatives.
Is equity release better than a deferred payment agreement?
It depends on the situation. For care received at home, equity release may suit. For a permanent care home move, a deferred payment agreement is often more appropriate. They are different tools, and an authorised adviser can compare them for you.
Do I need advice for equity release?
Yes. Equity release is FCA-regulated and can only be arranged through an authorised adviser. It is effectively irreversible and affects your estate and any means-tested support. We provide information and referrals, but we do not give regulated advice.
Related guides
Need help with your own situation?
We can introduce you to an FCA-authorised care funding specialist who will look at your circumstances and the options.