Holding onto the home you cherish
Many people are staying fit and healthy in retirement – but it’s a fact of life that as you get older, you may need help with health-related issues in order to stay mobile.
Keeping hold of independence is something that many people struggle with later in life – and part of this is having a home that can handle your needs. Adaptations may need to be made – and helping to afford these changes is one way that equity release could be a big help.
Why many people want to stay put
Some people fear that moving into a care home might lead to loss of independence, but it’s also about an attachment to a property that they’ve been calling home for many years. It can mean so much more than just bricks and mortar.
So while it might be practical to move somewhere smaller, or even to go into a care home, local ties and treasured possessions could be at risk as a result of a move, so there’s a lot to think about.
Adapting your home
It can become harder to get up and down the stairs, or in and out of the bath as you get older – so adaptations such as ramps and stair lifts, wider doorways, or an improved bathroom layout could make all the difference when trying to stay independent at home.
If you’re eligible for equity release, it could help cover the cost of these home improvements. Equally it could be used to fund other home improvements, like replacing kitchen appliances, or simply giving the place a lick of paint – it’s up to you.
Think about benefits
- Before you take out equity release, make sure you check if there are any state benefits you could claim, such as Attendance Allowance, Personal Independence Payments and Disability Living Allowance. Your adviser (see below) can go through these with you if you’d like.
- You may be able to get help from your local authority, including Disabled Facilities Grants. Different authorities offer different options – take a look at your local authority’s website for more information.
- Charities such as Age UK can also offer you support.
How equity release could affect your access to benefits
- Your eligibility for certain benefits depends on how much income you receive, and the amount of savings you have. The money you release with a lifetime mortgage will be taken into account too, and could therefore affect your eligibility.
- If you were to move to a care home at a later date, your home could be considered as an asset if you applied to your local authority for help with the costs. As a lifetime mortgage has to be repaid when you move into long-term care, having one on your home would affect the assessment, and may even take your home out of consideration.
Staying put with a lifetime mortgage
The type of equity release we offer is a lifetime mortgage – it’s a long-term loan secured on your home that allows you to release money from its value. It could be something to consider if you’re looking to fund home improvements.
Andrea and James, a married couple in their mid 70s
want to adapt their home to allow them to stay in it for as long as possible.
Please note that this is not a real-life example.
Married couple Andrea and James are in their mid-70s and have been enjoying a relatively comfortable standard of living until now, thanks to adequate private pensions. Their two children have successful careers and have no need for financial support, so Andrea and James have been doing all the things they couldn’t do when the children were young: carrying out home improvements, travelling abroad and upgrading their car.
Over the past couple of years, their health has started to decline: Andrea has mobility issues and James has a heart condition, high blood pressure and diabetes. The main priority for the couple is to stay in their home for as long as possible. There are few bungalows in the local area and a smaller property would mean less space for their possessions and their five grandchildren who often stay over. Staying local is also important to Andrea and James.
Their priorities are to convert the master bathroom to a wet room, install a stair lift and fit ramps to both doors, as well as a long list of minor home adaptations that will make their lives easier. The total cost of the work to the house is expected to be about £35,000, but they would also like to take the whole family on a big holiday before their health makes this impossible. In total, Andrea and James need about £45,000.
Their property is currently valued at £280,000, and they decide to take out £25,000 immediately to pay for the initial work. They put the further £20,000 into a reserve facility which they can tap into to pay for the additional work and the holiday.
What should I consider?
It’s a big commitment
First of all, you need to make sure you’re comfortable with everything that’s involved in taking out a lifetime mortgage. It’s a lifelong commitment, and if you choose to end your lifetime mortgage early you may have to pay substantial early repayment charges. Taking out a lifetime mortgage will reduce the amount of inheritance you are able to leave. Your tax position and eligibility for welfare benefits may also be affected.
There are no monthly repayments. Instead, interest is added to the loan and to any interest previously added each year. This quickly increases the amount you owe. The loan and interest are repaid in full, usually from the sale of your home, when you die or go into long-term care, subject to our terms and conditions.
It’s your decision
We encourage you to talk to family members before deciding on equity release, no matter how you plan to use the money you access. But remember, it’s your home, so the decision is yours to make.
Choosing to make repayments
If you decide to pay back part of your lifetime mortgage loan, you can do so – after you’ve had the loan for a year, you can pay back up to 10% of the total amount borrowed, each year, in up to four instalments. The minimum amount you can repay in each instalment is £500.
Here are other guides to explain how equity release could help you, and what to think about before you apply.