Most equity release schemes are designed for customers who want to stay in their home. These may be appropriate for you if you require care in the home or where one spouse needs residential care but the other continues to live at home. Money released can be taken as a single lump sum or as regular withdrawals. You can use the money to help pay for care directly or use it to buy an annuity which will then pay out income to help cover the care fees.
There are two main types of equity release schemes available: lifetime mortgages and home reversions.
Lifetime mortgage (currently available to homeowners over 55)
With a lifetime mortgage, you take out a loan against the value of your property.
No regular repayments of interest or the borrowed capital are required. Instead interest is added to the loan which usually has to be repaid on the eventual sale of the property on death, or when a surviving partner moves into care.
If you live alone and want equity release to allow you to move into residential care, then only a limited number of providers may be willing to help.
Home reversion (currently available to homeowners over 65)
With a home reversion scheme, some or all of the property is sold to the home reversion provider in return for a cash lump sum together with a rent-free lifetime lease, ensuring that you can stay in your home for life.
If you live alone but want to move into residential care, then Home Reversion Plans may not be available to you.