Equity Release News Equity Release To Rise As Pensioners Struggle With Care Costs
02 February 2009 / by Rachel Mason
Equity release schemes will become more common place over the coming year as pensioners struggle to meet the costs of care, according to Intune.
Intune, part of Help the Aged, says that despite falling house prices, many retired people who have paid off their mortgages still have “considerable equity” in their homes but low incomes, and predict that many are likely to turn to equity release as a way of releasing some cash to ensure they can stay in their homes and meet rising living costs.
Intune found that the biggest financial priority for a nearly 25 per cent of those aged 60 or over is ensuring they have enough funds to pay for long term care should they need it, with a fifth worrying that they will not have sufficient financial provision if they require care.
According to Age Concern, care home fees cost more than £500 per week on average, while care at home can often cost in excess of £200 per week, and anyone with savings or capital of more than £22,250, which includes any capital tied up in a property’s value, has to pay for their own care fees.
Intune’s research revealed that three quarters of pensioners want to remain in their own home should they need care and 40 per cent would rather pay extra to have in-home care than have to move to a care home.
However, that the basic state pension is just £90.70 a week for a single person and £145.05 for a couple, but the average home in England is worth £150,501 it is easy to see why only 18 per cent could afford to pay all their care costs without using an equity release plan.
“The cost of long term care is a major concern for the majority of people when they get older and many are forced to rely on the equity in their homes to pay for it,” said Stuart Castledine, managing director of Intune.
“Most older people want to lead their lives in the same way as they have always done – preferably independently in their own home, and equity release can help make this possible when there is no alternative,” he said.
Before considering equity release, Intune advises people to look at other options first, but recognises that equity release can be a safe and practical way of unlocking some of the money locked up in the value of a home.
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