A key condition of the typical Equity Release lifetime mortgage is that it will need to be paid off when you die or if you need to go into care.
This would suggest that this type of lending is not suitable to cover care costs or fees.
However, it is worth noting that this is only in respect of where the borrower needs to leave their home to go into residential care.
In the case of a couple this would only apply if the couple both had died or both had gone into care, in other words if one remains in the family home the loan could continue and does not need to be paid off.
Where Equity Release is a viable option for paying care fees is where the care is being provided in the family home.
In these instances, the extra cash or income generated by the mortgage can cover some of the care costs.
Paying for care is complicated, and as with many such things there are notable alternatives which should be explored including local authority funding, general government funding and even NHS funding (through the Continuing Care payment).
As care costs are ongoing there is one particular aspect of a lifetime mortgage facility that can be useful, which is the drawdown option. This is where a loan is organised for a set amount (e.g. £100,000) but this is not drawn on day one. Rather, amounts are drawn in stages (for example £5,000 to start with, another amount a year later etc.)
This has the significant advantage that interest is only applied on any sums after they are drawn down.
As with any exploration of Equity Release, there needs to be thorough comparison of all the alternatives, possibilities and the pros and cons – hence, the need for expert help.
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