My mother is aged 95, still living at home, but could do with releasing some money to pay for care. Is there a maximum age to apply for equity release?
No, although some lifetime mortgage lenders may be unwilling to lend due to your mother's life expectancy and the limited amount of time for them to accumulate interest, other lifetime mortgage lenders will, providing your mother can understand what she is applying for. If she can't you might have to first apply to become a Power of Attorney for her before you apply on her behalf.
If you would like to find out more about what a Power of Attorney does click on Power of Attorney.
As your mother is looking to release money to pay for care, before releasing equity we would first suggest that you check that she is not entitled to free home help from her Local Authority, as this could help preserve more capital in her property.
Should you mother be unable to get any help, or is already receiving her maximum entitlement and would like more care, as she will only have to pay for such care as and when needed and you can't be certain as to how long this care will eventually need to be provided for, you might like to look at drawdown lifetime mortgages. These schemes are a variation of a lifetime mortgage equity release scheme, will allow her to set up a maximum facility at the outset but within plan minimums only drawdown money in intervals, as and when she needs to pay for care. This will help keep the debt down as interest is only accumulated on any amounts withdrawn and not on any facility created but not yet taken.
You could also get a home reversion plan for someone of her own age but as these schemes work on the basis that your mother sells a percentage of her home's ownership to a reversion company in return for a discounted lump sum and most lenders do not give more than 60% of the value, this could turn out to be very costly in terms of equity lost should your mother just die or needs to go into full time care shortly. Likewise even though you can do partial home reversion plans, reversion companies may insist on your mother selling either 25% of her property or enough to raise £25,000 initially, which might be more than she needs. Another problem is that as each share sold is a separate legal transaction, it can take 3 months to sell further shares and raise more money.
Expert advice
Equity release can be a very good way of allowing people to receive any care at home. However, the rules surrounding long term care and the need for a Power of Attorney are complex and need to be fully understood before entering into an equity release scheme for care purposes. For this reason apart from seeking advice from a specialist equity release adviser, we would recommend that you seek advice form one which is also authorised to give advice on Long Term Care.
The Equity Release Centre Principal, Keith Hargraves is authorised to give advice on Long Term Care matters and therefore we are ideally placed to give you expert impartial advice on whether equity release would be suitable for your mother. If you and your mother would like a personal home consultation to discuss her long term care needs and equity release please complete our online enquiry form.
To find out more about Long Term Care, please visit our specialist long term care website at www.adviceoncare.co.uk