With care costs rising an average of 57% in the past five years, an increasing number of individuals are faced with the challenge of financing long-term care needs, making equity release a potential solution.
With the cost of care averaging £800 per week, you’ll need a hefty amount to self-fund care in the UK. Equity release has enabled many homeowners to receive the care they need to stay in their own homes in later life.
Home Care Costs
Home care has become increasingly expensive, which can cause stress and anxiety. It is important to recognise that care providers’ fees have gone up due to wage bills and food prices, meaning they generally have no choice but to pass these increases on. Most of the companies that provide home care are small businesses, not large chains, so their capacity to absorb price rises is quite limited.
The cost of home care also depends upon your requirements. One of the first things you need to consider when choosing a home care provider is the fees. The price of home care services, also known as domiciliary care and in-home care, varies depending on where you live but you should expect to pay an average of between £20 to £30 for the hourly cost of care at home.
How much does home care cost per hour?
Depending on your needs, home care can often be cheaper than going into residential care. Be aware that fees could increase at weekends and bank holidays.
For example: You need home care two hours a day at a rate of £25 per hour. This means you will pay: £350 per week, £1,400 per month, £16,800 a year.
How much does live-in care cost?
Generally, live-in care fees start at around £900 to £1,400 per week but can be as much as £2,000 per week.
How much 24-hour care at home is will vary between individuals as the cost varies depending on your needs, what services you require and what provider you choose.
The Benefits of Home Care
Some of the advantages of staying in your own home in later life include:
- Home care lets you remain in familiar surroundings: This is the first and possibly most obvious advantage to being cared for at home. It allows you to continue to live where you are the most safe and comfortable, in your own home surrounded by friends and family.
- Independence: Staying in your own home means you can continue to do the things you love, when you choose to.
- No need to uproot and sell your home: If you choose residential care, it’s possible that you’ll be required to sell your home in order to cover the fees. Selling your home and all the complications that come with it is a stressful event at any stage of life, but when the need for care occurs suddenly, selling your home alongside trying to find care can be extremely challenging.
- Quality of life: Keeping your memories close can lead to a better quality of life as you age – in fact, studies of people living with dementia found that those who stayed in their own homes enjoyed a better quality of life (measured by less need for walking sticks, more social contact, higher levels of activity and exposure to daylight and less use of psychotropic drugs) than those in care homes.
- Physical health benefits: Research shows that those in residential homes are three times more likely than those in their own home to have a fall.
- Mental health benefits: Research highlights that you’re less likely to suffer from depression at home than in a residential facility.
Releasing Equity to Stay in your Home in Later Life
To be able to stay in their homes in later life, some homeowners over 55 are releasing equity to access some of the capital currently tied up in their property. The regulations involved with equity release mean you can never be evicted from your home, enabling you to stay there for as long as you’re able to continue living independently.
There are lots of different equity release products available, so it’s best to talk to a specialist adviser who can discuss whether releasing equity may be right for you, as well as the different products, ways to minimise interest, and how you want to access the money (either in instalments or in one lump sum).
Jan Johnson, founder and Managing Director of 55Plus, says: “When looking to provide the best recommendation for your needs, our advisers would need to fully understand your individual personal circumstances. We would discuss what level of care you need and work out how much this will cost each month and consider alternatives to equity release first. For example, one option may be to take in a lodger to increase your income.
We would also discuss if you could use any existing savings or ask friends or family for assistance. You may also be eligible for benefits to help you. If these alternatives are not suitable then we would consider how equity release may provide a solution.
It’s important to ensure that no means tested benefits are affected by taking out equity release, which we would assess as part of this process.”