Social care isn’t free in England. This guide includes six ways to pay for your future care if you’re a self-funder, with information about Equity Release, immediate needs annuities, letting your property out for income and more.
Even if you’re sure that you’re a self-funder, you could be eligible for benefits such as Attendance Allowance or PIP that could help towards the cost of your care.
You may also qualify for NHS Funded Nursing Care or NHS Continuing Health Care.
Ask Autumna about funding your care and the options that could be available to you, seven days a week on 01892 335 330 or continue to read this article for ideas on how to pay for your care.
The options listed below may or may not be suitable for your unique circumstances.
This information is not financial advice and for guidance on your specific situation, you may wish to talk to a financial advisor.
If your care needs are less complex and you can live independently, you might also consider buying a retirement living property either with cash or an older person’s mortgage.
A care-fee annuity (also known as an immediate needs annuity) is a financial product, which you would pay for to ensure that you have a lifetime income that can be used to pay for the cost of care indefinitely.
The annuity income is tax-free if it’s paid directly to a registered care provider, whether that is a home care company or a care home business.
This type of agreement needs careful consideration as you risk potentially paying out more than the actual cost of care. However, a benefit is that you could also pay less for the care-fee annuity than the cost of your care. It depends on the cost of the care you receive and how long it is provided.
Another consideration is that by purchasing a care-fee annuity in exchange for an income for care, you can ring-fence your remaining capital. This can be a practical solution for people who want to leave money for their family.
Equity Release is a financial product that involves borrowing money from a commercial lender or bank and securing that loan against the value of your property.
Usually, if you take out an Equity Release agreement you won’t make any repayments until your death when the loan plus all the accrued interest will need to be repaid.
Generally, Equity Release is available to people aged 55 and over with a home that has a market value of at least £70,000, though criteria may vary between providers.
There are also usually minimum loan amounts but again, figures for this can vary between lenders with some stipulating a minimum loan of £10,000 and others requiring a higher loan.
Furthermore, the maximum amount you can borrow with Equity Release is usually up to 60% of the value of your home.
Equity Release payments are usually transferred as a lump sum but you may have the option to receive payments in staggered chunks if it suits you better and if your Equity Release lender allows for it.
Investing money so that you can receive a bigger return to pay for your care fees is risky but can also be financially rewarding, depending on the type of investment, your experience in investing and your risk appetite.
Some older adults may be in a position to invest money, knowing that they may lose it whereas for others, the risk of ending up with nothing is far too great.
It’s also important to consider how long you want to hold an investment.
Investing is often a long game; unfortunately, some older adults do not have time for a long-term investment strategy that involves holding assets for more than three years, however, younger adults planning for their future may be more likely to consider this option viable.
This is essentially a loan from your local authority. If your savings are below the means test limit then you can apply to your local authority and ask them if they will lend under this scheme.
Please note that they may not necessarily agree to lend.
If they do agree then they will contribute to the care fees and for every pound that they contribute there will be a pound of debt (or mortgage) on the property. When you die the loan plus interest has to be repaid to the local authority.
Listing your home as a rental property can feel unfamiliar but the income generated from letting out a property can be substantial depending on the size of your property and the demand in your area.
To find out how much you could make from being a landlord, look at property portals like Rightmove and compare the cost of rent for properties that are similar to yours.
Be realistic and consider factors that influence how much can be charged, including:
Depending on the type of property you have, you might consider letting it out as shared accommodation to maximise your rental income, though ask a letting agent about the demand in your area before committing to a strategy.
When calculating how much profit you’ll make from renting out your property, include fees and costs such as:
You’ll also need to consider that marketing your property to find tenants can be time-consuming unless you pay a letting agent to do it on your behalf.
Keeping tenants in the property can also be challenging. You may have to deal with complaints and factor in that your property may be empty at times, resulting in you experiencing periods of no rental income.
You may be able to list your property on websites including Airbnb which promote short-term lets in this instance, though again, tenants are never guaranteed.
Parting with your property is emotional. Letting go of a home is a big step that lots of people simply don’t want to consider and that’s ok. Ultimately, selling your property is your decision - no one can force you to leave your home.
If you’re happy to sell your home to pay for your care, you may want to consider asking an estate agent to value your property and give you guidance on how much it could be sold for.
There are also services like Spring, who will buy your home quickly, no matter what the condition.
Whether you’re downsizing to free up cash for home care or selling so that you can fund a permanent move into a care home, selling a much-loved home needs careful consideration.
If you feel pressured to sell your home by friends, family or your local authority, seek advice from an impartial outsider, whether that be Citizen's Advice, Age UK or Autumna.
No one wants to part with their property or eat into their hard-earned savings. The thought of letting a much-loved home out to strangers can also feel unfamiliar and yes, heart-breaking.
There is hope for self-funders though and that stems from choice.
When you pay for your care, you choose where that care is received. If you don’t like it, as the customer you can complain and change your plan.
The first step would be to find out what care you need, and how much your cost of care might be and then explore your options with a financial advisor.
Care costs vary widely depending on the type of care needed, where you live in the UK, and the financial resources available.
Nursing care is more expensive than residential care and homes providing specialist support such as dementia-centred care usually cost more.
Quality care from professionals whether in a care home or received at home from a home care worker or live-in carer can be significant.
Watch our short video below about 2024 care home prices or use the care finding tool for specific costs for care services in your area.
At its most simple level, you can then divide your shortfall into the total value of your assets.
The example below is based on hypothetical figures and for specific calculations based on your finances, you should ask a financial advisor. It's also important to note that the below example does not factor in the possibility that care costs could increase during the period in which you need care.
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The good news is that there are ways to avoid selling your house to pay for care, though usually, it depends on your circumstances, including your health needs and whether you have a dependent living in the property.
The self-funding population of care home residents is rising.
Source: Office for National Statistics
10,400
Care Homes
12,055
Home Care Services
1,005
Live-in Care Services
1,861
Retirement Living Developments
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