Equity release funds 6 years of home care
Nearly a fifth (19%) of over-55s would consider selling their home to cover the cost of long-term care, but 85% would prefer to receive care at home, according to research from The Equity Release Council released today.
October 23, 2013
Homeowners over the age of 55 who need long-term care can pay for an average of six years’ worth of care at home through equity release schemes, said the report.
More than half of over-55s (57%) recognise their home as their biggest financial asset in retirement. The Council’s research demonstrates that the average over-55 owns a home worth £230,862, opening up the potential to access an average of £61,178 through an equity release plan.
Paula Higgins, CEO of The Homeowners Alliance, said equity release could be a good option for people looking for a way of staying in their homes for longer.
“It’s not for everyone but equity release can be a worthwhile way of releasing cash from your home. And for those who are looking for a way of funding long-term care while staying at home this could be the answer but proper financial advice should be provided,” she said.
Almost a third (32%) of over-55s in the UK believe they will need long-term care later in life, but over a third (38%) say they cannot afford to pay for it.
The report estimates the average cost of long-term residential care is £28,367 a year. However, data from Aviva’s Real Retirement Report show that the average pensioner income is £18,132 a year and 85% of over-55s confess to having made no plans at all for long-term care later in life.
Nigel Waterson, chairman of The Equity Release Council called for an amendment to the Care Bill that would make sure that local authorities referred people funding long-term care to regulated financial advice.
“When facing difficult, emotional decisions such as how to pay for long-term care, it is crucial that people seek expert, individually tailored and regulated financial advice,” he said.
“With the average over-55 owning a home worth £230,862, using equity release would allow them to meet these costs and still leave an inheritance without having to sell the family home.
“Ultimately, people are in need of guidance that allows them to plan for care costs with the reassurance that they will not necessarily have to spend all their savings on this expense,” he added.