Using Equity Release to Pay for Care Home Fees
If you're moving into long-term care yourself, most equity release plans require the loan to be repaid at that point — meaning your home will usually need to be sold. If a partner remains living in the property, different rules may apply. Always check your specific plan's terms before assuming either outcome.
Care costs are one of the most common reasons people consider equity release later in life. It can genuinely help — but it interacts with means-tested support in ways that catch people out, and it's rarely the only option worth considering.
This guide explains how it actually works for care funding specifically.
How Equity Release Can Help With Care Costs
Equity release can fund care in two main situations: paying for care you receive in your own home, or covering care home fees for a partner while you remain living in the property. Money released is typically tax-free and can be used for almost any purpose, including care costs.
Since May 2025, Equity Release Council standards require member lenders to waive early repayment charges if the last borrower moves into long-term care or moves in with relatives providing care — but only with a medical practitioner's certificate confirming this. This is a specific condition worth knowing about in advance, since it's easy to assume the waiver applies automatically.
The Benefits Trap Most People Miss
This is the single most important thing to understand before releasing equity for care: doing so can push your capital above the means-testing thresholds used to assess eligibility for local authority care funding and certain benefits.
Capital above £23,250 in England generally means you're classified as a "self-funder" and must pay the full cost of your own care
Releasing a lump sum can also end entitlement to Pension Credit, Housing Benefit, or Council Tax Support, which are typically lost once capital exceeds £16,000
A drawdown structure, taking only what's needed as it's needed, can help manage this risk compared to a large lump sum sitting in a bank account
This doesn't mean equity release is wrong for care funding — but going in without understanding this interaction can create a worse financial position than the one you started with.
Alternatives Worth Checking First
Before committing to equity release for care funding, it's worth ruling out these options:
Attendance Allowance — a non-means-tested benefit worth £72.65 or £108.55 weekly (2026 rates) for those needing help with personal care, often overlooked before people turn to equity release
Local authority deferred payment schemes — the council pays your care home fees, secured against your property, then reclaims the cost from your estate after death. Interest rates are typically much lower than equity release, often around 2-3%
A Retirement Interest-Only (RIO) mortgage — if you can afford monthly interest payments, this is usually structurally cheaper than equity release over time
Downsizing — selling the property outright avoids ongoing interest entirely, though isn't suitable if a partner still needs to live there
FCA rules require regulated advisers to document why equity release was chosen over each of these alternatives — a genuine adviser conversation should walk through all of them, not just present equity release as the default answer.
If a Partner Remains in the Home
If you're moving into care but your partner continues living in the property, most lifetime mortgages allow the plan to continue rather than requiring immediate repayment — check your specific plan's terms, since this varies by provider. This is different from both partners moving into care or the sole owner doing so, where repayment is typically triggered.
This is a case where speaking to your specific provider before assuming either outcome is essential — the consequences of getting this wrong (an unexpected forced sale, or missing an available protection) are significant.
Getting the Right Advice
Equity release for care funding should only proceed after advice from someone qualified in both equity release and care fees planning — the two specialisms don't always overlap, and getting only equity release advice risks missing care-funding-specific consequences like benefit loss.
Read our full guide to paying for care for the complete picture of funding options beyond equity release, and our equity release explained guide for how the product works more broadly.
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