Using equity release to pay for care home fees
Equity release for care home fees can work in some situations, such as funding care at home or a partner's care while you stay in the property. But if the last borrower moves into long-term care, a lifetime mortgage usually has to be repaid, typically by selling the home, and released cash can affect means-tested support.
This guide explains how it works for care specifically. We do not provide financial advice.
How equity release for care home fees can work
Equity release lets homeowners aged 55+ borrow against their home without selling it. With a lifetime mortgage, interest is usually added to the loan rather than paid monthly, so the amount owed grows and reduces what is left for your estate. Our guide to how equity release works covers the costs and risks.
For care, it tends to come up in two situations: paying for care at home, or paying care home fees for one partner while the other stays in the property on a joint plan. Money can be taken as a lump sum or in smaller amounts through drawdown.
What happens to a lifetime mortgage if you move into care
If you are the only borrower, or the last remaining borrower on a joint plan, moving permanently into long-term care usually ends the plan. The loan and rolled-up interest then become repayable, normally from the sale of your home. Lenders usually allow a period to sell, often around 12 months, though this varies. Many plans waive early repayment charges in this situation, but a lender may ask for evidence such as a medical practitioner's confirmation.
If a joint borrower still lives in the home, the plan usually continues. See what happens to a joint plan if one partner dies or moves into care and what happens to your home if you move into care.
How means-testing for care works in England
Your council can assess your care needs and your finances. In England, if your capital is above £23,250 (2026/27), you are usually expected to pay the full cost of your care. Between £14,250 and £23,250 (2026/27), you may get some help but will contribute from your capital as well as your income.
Your home is usually counted if you move into a care home, unless a partner or certain relatives still live there, though it may be ignored for the first 12 weeks. Scotland, Wales and Northern Ireland have different rules and limits.
How released cash can affect funding and benefits
Money you release and keep in savings counts as capital. A lump sum could lift you above the upper limit and reduce or end benefits such as Pension Credit or Council Tax Reduction. Drawdown can limit the cash held at any one time.
Deprivation of assets
If a council believes you deliberately reduced your capital to avoid care costs, for example by gifting released money to family, it can treat you as still having that money. There is no fixed look-back period; councils consider the timing and the reason.
Care funding in Scotland, Wales and Northern Ireland
The rules differ outside England. In Scotland, people assessed as needing personal or nursing care do not pay for that part of their care, although care home accommodation costs are still means-tested. Wales uses a higher capital limit for care home residents and caps weekly charges for care at home. In Northern Ireland, health and social care trusts arrange care, and care at home is generally provided without charge. Check the current rules with your local council or trust before relying on them.
Alternatives worth understanding
- Deferred payment agreements. The council pays your care home fees and secures the cost against your home, usually repaid when the home is sold or from your estate. Interest and fees can apply, with interest capped at a nationally set maximum.
- Attendance Allowance. A benefit that is not means-tested, for people over State Pension age who need help with personal care, paid at one of two weekly rates.
- A care fees annuity, which pays an income to the care provider in exchange for a lump sum.
- Downsizing or selling, which avoids ongoing interest but may not suit a partner who needs to stay.
Our guide to paying for care options explains each of these.
Getting advice on care funding
Equity release requires advice from an FCA-regulated adviser, who should explain the alternatives as well as the plan. Care-fees planning is a separate specialism, and independent specialist care-fees advice is available. See finding a regulated equity release adviser for what to check.
Not sure which option fits your circumstances?
Written and reviewed by the Later Life editorial team. Last updated .
Frequently asked questions
Can I use equity release to pay for care home fees?
It can be possible in some situations, most often to pay for care at home or for one partner’s care home fees while the other stays in the property on a joint plan. If the only or last borrower moves permanently into care, a lifetime mortgage usually ends and is repaid instead.
Do I have to sell my home if I move into a care home with a lifetime mortgage?
If you are the only or last remaining borrower, the loan and rolled-up interest usually become repayable when you move into long-term care, and the home is normally sold to repay it. Lenders usually allow a period for the sale. If a joint borrower still lives there, the plan usually continues.
Will releasing equity affect my local authority care funding?
It can. Money released and held as savings counts as capital in a council’s financial assessment, so a lump sum could take you above the capital limits and make you a self-funder. It can also reduce means-tested benefits such as Pension Credit. Drawdown can limit the cash held at any one time.
Could giving away equity release money count as deprivation of assets?
It could. If a council decides you deliberately reduced your capital to avoid care costs, for example by gifting released money to family, it can assess you as if you still had that money. Councils look at the timing and reason rather than a fixed time limit. Specialist care-fees advice can explain the rules.
What is a deferred payment agreement?
It is an arrangement in which your local council pays your care home fees and secures the cost against your home. The amount is usually repaid later, when the home is sold or from your estate. Interest and fees can apply, and eligibility rules vary. See our guide to paying for care.