Moving into a care home is one of the most daunting tasks for seniors and their loved ones. Most people opt to sell their homes to pay for care. In some cases, this is a strategic and perhaps the best move, but it’s not always necessary to sell your home.
Unfortunately, most people don’t know that there are other options depending on your circumstance and that you don’t have to sell your home to cater to the care home fees. There are alternative options, which include:
NHS Continuing Care Cover
For persons with conditions that require ongoing healthcare, the best option is to apply for NHS Continuing Healthcare funding. This applies to people with a disability, major illness, or have had an accident.
The NHS Continuing Healthcare funding is not means-tested. But you are assessed against a complex National framework for continuing healthcare to determine a primary health need. The assessment is conducted by a multi-disciplinary team that submits its findings to the NHS.
The assessment consists of an initial checklist, followed by a full evaluation. If the team returns a positive recommendation, the NHS, through the Continuing Healthcare funding will cater to all your care costs.
Why not also read: When is the Right Time to Move into a Care Home?
This type of funding is not popular, which forces many people to struggle to pay for care costs and ultimately selling their homes unnecessarily.
Local Authority Funding
If you only require social care, the local authority can help to cater to the cost of a care home. However, this option is means-tested. You only qualify if you have little or no savings, and you don’t own your home.
In some instances, you might own your home but based on selected criteria, the home might be disregarded, qualifying you for funding from the local authority. Some of the factors that could cause your home to be disregarded during a means test include:
- If a partner or an ex-partner is still living in the home.
- If a relative of over 60 years lives there.
- There are children under 18 years living there.
- The home is housing a disabled relative.
- Your divorced or estranged partner is living in the home and is a lone parent.
The amount the local authority can pay for your care depends on the findings of the means test. If you have savings and assets worth less than £14,250, you’re entitled to support from the local authority. However, you will be required to contribute through your income, like your pension.
For seniors with assets and savings not lower than £14,250 but not exceeding £23,250, you can still get assistance, but you are required to contribute towards the care costs on a sliding scale.
People with assets and savings of more than £23,250, including property, have to pay their care fees in full.
I don’t qualify for NHS Continuing Healthcare Funding, and I don’t want to sell my home. What Should I Do?
You still have several options on the table. However, you need to speak to a financial adviser to determine which one is best for you, given your circumstance.
Deferred payment agreement
Deferred payment agreements allow you to keep your home for the period of your lifetime. Under this arrangement, the council pays your care home fees and then reclaims the money after your property is sold or after the owner’s demise.
Some of the conditions the council will consider while giving you a deferred payment agreement include:
- They have assessed your needs and determined that you need to be in a care home
- Your capital is under £23,250 without including the value of your home
- Your home is not disregarded
The council must be sure they’ll get their money back under this agreement. You should know that there could be administration charges and interests because the payments are classified as a loan. You also have to ensure the property is insured and properly maintained.
Rent out the home
Since you’re not staying in the home and don’t want to sell it, you can rent it out and use the income to pay for your care home fees. The amount might not be enough to fully settle the costs, but it will reduce the amount you need to borrow through deferred payment.
Don’t forget that a rental income is taxable, and you will have responsibilities as a landlord. But this is still a viable option with the right parameters in place.
If it’s inevitable to sell the home, do I have to sell it immediately?
Even with the multiple alternatives, at some point, you might have to sell your home. But you don’t have to worry about selling it immediately to pay for your care home fees.
The Local Authority can’t force you to sell the home. Instead, they should offer you a deferred payment agreement to cover the costs of the care home as you work on selling the home.
Also, the Local Authority will give you a 12-week disregard if the home is included in your capital and income. Within these 12 weeks, you can work on selling the house. If you can’t move the home in time, you can apply for a bridging loan that will help cater to your care fees as you find a buyer for your home.
You can also consider opting for an insurance policy like the immediate need care fee payment plans (immediate needs annuity) or the deferred care fee payment plan. In these options, you commit a lump-sum investment in the policy. In return, the insurance company pays a regular income that could cover the care cost.
For the policies, it’s possible to use your home’s value to secure a loan so you can buy an annuity.
Alternatively, you could consider an equity release. It will help you free money from your home without selling it. But you need to consider this option cautiously.
There are numerous options you can consider when trying to fund your care fees. However, the only one that doesn’t involve selling your home whatsoever is the NHS Continuing Healthcare fund, which caters to all your care expenses.