If you’re faced with care home fees, you should know how to avoid selling your house to pay for care.
Selling a beloved family home is a daunting prospect for many families because they think it’s their only option to finance care.
But it doesn't have to be this way, as there are a number of ways to finance elderly care.
This article will cover your options so you can learn how to avoid selling your house to pay for care.
Disclosure: You should not use this article to make financial decisions. We highly recommend you seek professional advice from someone who is authorised to provide financial advice.
Here’s a summary of what we’ll cover:
- The local authority will assess your ability to pay for care based on the value of your estate, including any property.
- If you aren’t eligible for local authority funding for care, you’ll have to pay it yourself and this can be a strain on finances.
- Selling your house could generate income to pay for care, but this isn’t always a viable option.
- You can avoid selling your house to pay for care using a scheme such as equity release or deferred payment.
What will I have to pay for care?
If you need care in later life, you have the option to receive it in your own home or in a care or nursing facility.
What you end up paying depends on your financial situation, which includes any savings, property or notable assets.
When you meet with the local council for your care needs assessment, they will carry out a financial means test as well as looking at your care needs.
The savings you have will determine whether you are eligible for full, partial or no funding from the local authority.
Outline of upper and lower capital limits
- If you have £23,250 (upper capital limit) or more in savings – you are not eligible for funding.
- You have more than £14,250 (lower capital limit) but less than £23,250 – you may be eligible for some funding.
- If you have less than £14,250 – you are likely to be eligible for full local authority funding to help pay for your care.
Find out more about funding in our guide to local authority funding for care in your own home.
NHS Continuing Healthcare
In the case of people with significant healthcare, as well as care needs, NHS Continuing Healthcare funding is available.
This allows people to receive necessary healthcare in a care home or their own home, paid for by the NHS.
If you have a significant healthcare need and are worried about paying for care, this could be the answer to avoid selling.
There’s more information about funding your care in the NHS continuing healthcare guide.
Confused about care funding?
Is it necessary to sell your house to pay for care?
Paying for care can be very expensive, especially if health needs change unexpectedly.
This can leave family members wondering what happens when the money runs out and are next of kin responsible for care home fees?
But selling your house can be disruptive, especially at a time when you and your family are adapting to health and care needs.
You may be wondering how to avoid selling your house to pay for care, so keep reading to understand your options.
Can selling your house help pay for a care home?
For some people who are moving out of their home to live in an assisted living facility or care home, selling your house could be a good option.
Receiving care in another setting means that it’s not necessary to own a property any more, the value of which can be turned into cash.
So selling your house, especially if you’re already not living there, may be a more accessible way to fund care home costs.
Can you be forced to sell your home to pay for care fees?
You cannot be forced to sell your home to pay for care fees if any dependents are living there.
Dependents are people who rely on you for support, including:
- Close relatives under 16 or over 60
- Civil and unmarried partners
- Ex-partners if they are a single parent
If a dependent lives there, the local authority will not count the value of your property in the financial means test.
This could make you eligible for full or part-funding for your care costs.
How to avoid selling your house to pay for care
Sometimes selling your house to pay for care isn’t an option, due to others living there or wanting to receive care at home.
And you may want to pass it down to family as inheritance after you die. (Check out the guide to inheritance tax threshold)
There are, in fact, a number of ways that you can use your home to help you financing your care.
In this next section we’ll outline these options to help you avoid selling your house to pay for care, which are:
- Equity release
- Deferred payment scheme
- Rental income
Can you use equity in your property?
If you’re struggling to find the cash to pay care costs but own a property, there is a solution.
The value of your home can be used to make available cash for care fees, without having to sell up.
This can be achieved through a process called equity release, which you arrange with a specialist lender.
We’ll look at the basics of this solution in the next section, but if you want more detail check out what is equity release?
How does equity release work?
Equity release can be done through two dedicated products: a lifetime mortgage or home reversion.
You essentially sell a portion of your home to the lender who, in return, pays you for what they own.
If you’re planning to move to a care home, and have dependents and want to keep hold of your house this is a nice solution.
And, of course, if you want to receive your care at home, you can stay living in that house.
Is equity release suitable for everyone?
Using an equity release loan is a financial decision that should only be made having undertaken detailed research.
With equity release, you are essentially selling your house (or a part of it) to a lender, which may come with specific conditions.
While it allows you to stay living in it, you may get less for your home using equity release.
It’s a big decision, that needs careful planning and consideration.
Confused about care funding?
Deferred payment agreement
If you don’t qualify for funding from your local authority, you are fully responsible for funding your own care.
This can be a huge financial burden, which many families are unprepared for at the time it is needed.
A deferred payment agreement may be able to ease some of that financial pressure.
How does the deferred payment agreement work?
If you make a deferred payment agreement, your local authority will pay for your care upfront.
You then repay that debt using money generated when your property is sold or after you die.
If you wish to receive care at home, a deferred payment agreement is a great way to avoid selling your house to pay for that care.
Or unlike equity release, you still fully own your home and may be able to rent it out if you’re not living there.
Rental income
If you’re moving into a care home or assisted living facility, why not consider renting?
Renting your home can be a great way to earn a steady income and means you can avoid selling your house to pay for care.
The duties of being a landlord can also be avoided with an lettings agent or family member who manages the property for you.
People considering this as an option to pay for care should bear in mind any costs associated with renting and property maintenance.
Gifting your home
- Gifting your home to your children is something that people can do, though it can have negative implications.
- If it looks like you have gifted your home with the deliberate intention to avoid care home fees, your gift could backfire.
- This is called a deprivation of assets, and isn’t a recommended course of action.
If you found this guide useful then you might like:
- Putting a house in trust to avoid care home fees
- What’s the difference between care home and nursing home?
- Attendance allowance pitfalls: how to avoid them
Get the right care for your loved one
Knowing what care your loved one needs is the first step to getting them the right care to live independently at home.
Enter your loved one’s care needs into the Sweet Pea platform to connect with top quality care providers in your area.
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