Can equity release help to fix the care crisis?

The report from Key highlighted that the cost of residential care homes per person per year – can range between £27,000- £39,000 or £35,000-£59,000 if nursing care is required. 

Meanwhile, paying for care at home is less expensive at around £14,000 per year for two hours of help a day.

Mr Hale adds: “This is where equity release comes in as a client could conceivably use drawdown or a regular income plan to fund care in their own home, which is cheaper than going into a care home and allows the older person to stay in familiar surroundings.  

“Equity release products already play an important role in funding domiciliary care and home adaptations for some customers who want to remain living in their properties.--Jim Boyd

“It is also the overwhelmingly most popular option with 61 per cent of over 55s saying they would prefer to have care in their own home (either their current home or a downsized property) rather than in a residential care home.

“Looking ahead, I do believe equity release has a significant role to play in the care market and, once the guidelines are clearer around what people need to pay for, then I think we will see more product development which is designed to support  this need.”

Georgina Oxton, strategic sales manager at LV (pictured), agrees. She says drawdown lifetime mortgages could provide a viable solution to fund care needs, allowing access to additional funds as care bills become due.

She adds: "This can provide peace of mind for customers and their families. Knowing what really matters to customers and how to support them as a financial adviser is critical.

"And as providers we have a role to play in helping advisers help their clients – giving them the confidence they’ve recommended the right product and service. Value-added services are becoming more common across retirement and protection products."

LV offers a number of services, including Care Navigator and LV= Doctor Services to its lifetime mortgage customers. Care Navigator is designed to help people looking for care options in later life, while the doctor services gives customers access to fast and convenient medical support.

Jim Boyd, chief executive of Equity Release Council, agrees, saying the later life lending industry has a vital role to play in tackling the socio-economic challenges of an ageing population, as rising social care costs are compounded by inadequate retirement income, as final salary pensions are set to be extinct for most people by 2050. 

Mr Boyd adds: “Equity release products already play an important role in funding domiciliary care and home adaptations for some customers who want to remain living in their properties.