Most people’s at-home care funding requirements are unknown
Many people at some point in their lives need help to remain living at home.
Decline can be gradual over years, at first help with occasional help in the garden or assistance to get those jobs around the house that become too onerous or difficult due to incapacity.
You stop driving and then you need help getting out and about or going shopping.
All gradual and affordable?
You have time to plan, adapt.
You might get help with an attendance allowance or be assessed and allocated funds to cover the costs or some of the costs towards care.
Unfortunately, and quite often, something happens that requires a sum of money – or ‘statutory’ funding from the state comes too late or is insufficient for the recipient’s needs.
That is, what the state assesses as being sufficient for your needs isn’t!
With Direct Payments, there is scope for you to shop around and to “top up” payments for what you want.
We deal with a lot of customers who do this – pay the extra, albeit often small sums that are required for the care and support that they need.
The prospect, however, of needing substantially more is not often thought about or planned for.
Without moving into a care home, or needing (24/7) live-in care in your own home, you may still need considerably more money to pay for the extra care and support to remain living in the comfort of your own home over a period of years.
This is a worry for those managing retirement on a fixed income but fortunately, one that can potentially be overcome.
Later Life Lending (Equity release) is a potential source of funding for those with their own property.
A host of “providers” including the likes of Nationwide have entered the market in recent years. You need to be over 55 to qualify.
It might be worth exploring these options when thinking about the longer term.
We would certainly recommend assessing what you might need and get information on the costs from reputable providers with some benchmarks of what represents value for money and flexibility.
You should be able to obtain the initial advice for free.
If you own your own property later life borrowing enables up to 60% of the value of your property dependent on age, the money is available for whatever purpose you want including the unknown costs of funding care.
Unknown because you don’t know for how long or what type of care you will need.
The local council will of course make the funding arrangements but then charge your estate upon death.
Making the arrangements yourself will enable you to be in control and might not be so costly.
What are the costs of social care at home?
There is a cost associated with setting up a scheme based on your personal funding requirements, amount to be raised (borrowed), setting up costs can be in the region of £1,500 to £3,000 or a percentage arrangement fee, typically circa 2% with valuation and professional fees.
We’ve found providers who charge a flat fee of £1,500 and with no other charges.
There is probably a case for finding a provider that charges a flat or fixed “arrangement” fee and to have a drawdown facility – having the largest sum available to meet your needs (e.g. to cover the unknown costs of paying for care over a number of years) and paying one set up fee, rather than having to go back to arrange additional funds with the associated cost of doing so at a later date.
We have established that, subject to contract, having paid an initial set up fee you will only pay for the funds – the money that you draw down to spend.
The Money Advice Service set up by HM Government provides impartial, independent advice about what to look for.
We would also recommend that you speak with an independent financial advisor, solicitor or accountant to look at the options carefully before making a decision.
Later life borrowing may have a more expensive interest rate, they can be charged at a fixed rate, but unlike a conventional mortgage, they don’t have an end date.
The end date being when the person dies or gives up living in their own home and moves into a care home.
At that point, the property is sold to cover the interest and initial loan, with the balance returned to the Estate.