When care costs need funding and a family wants to avoid selling the home immediately, equity release is sometimes presented as a solution. It can work well in some circumstances, but it carries real costs and risks worth understanding clearly before committing.
What equity release actually is
Equity release, most commonly a lifetime mortgage, allows a homeowner to borrow against the value of their property while continuing to live in it (or, in a care context, to fund costs while a spouse remains living there). The loan plus accumulating interest is typically repaid when the property is eventually sold, often on death or a move into permanent care.
How interest compounds over time
Because interest on a lifetime mortgage is usually not paid monthly but instead added to the loan and compounds over time, the amount owed can grow substantially over a period of years — sometimes much faster than families expect when they first take out the product. This is the single most important thing to model carefully before proceeding.
How it interacts with means-tested funding
Released equity generally counts as capital for local-authority financial assessment purposes, which can affect eligibility for means-tested council funding. This is a critical point that is sometimes overlooked — equity release used to fund one family member’s care while a spouse remains at home needs to be considered carefully alongside the property disregard rules.
The alternative: a deferred payment agreement
Local authorities offer deferred payment agreements, which allow a person to delay paying certain care costs, with the local authority placing a charge against the property instead — this can sometimes be a lower-cost alternative to commercial equity release, worth discussing with the council before looking at commercial products.
What to do before proceeding
Take independent financial advice from an adviser regulated for equity release specifically, not general advice alone, and ask for a clear illustration of the total amount likely to be owed over five, ten and fifteen years under realistic interest-rate assumptions before signing anything.
How to use this guide in practice
Don’t read this as general information — use it as a worksheet. Write down the details of the person who needs care, the current limits of the situation at home, the monthly budget, the documents you already have, whether a local-authority financial assessment may apply, and who you’ve already spoken with. Then turn every unclear point into a specific question. A family that arrives with a clear picture usually gets more useful answers than one calling under stress with scattered information.
Keep one simple rule: anything about admission, cost, funding, timelines and whether a care home fits must be confirmed directly with the care home or the competent authority serving your area. This guide prepares the search — it does not replace official decisions.
Want a clear shortlist before you start calling?
If you don’t know which care homes to contact first, Curalune Care Help can prepare an ordered shortlist of 3–5 suitable options — with CQC ratings, contacts, useful links and a ready-to-send inquiry.
The service helps you organise the search.£69, one-off. If you don't receive at least 3 homes matching the area and criteria you gave us, we refund you in full. It does not replace the care home’s own assessment and does not guarantee admission, price or bed availability.
Important limit
Curalune offers practical help with the search and orientation. Admission, pricing, bed availability and the final assessment always rest with the care homes and the competent authorities (the local authority, the NHS, the Care Quality Commission).
Paying less is mostly a paperwork problem
What a family actually pays is decided less by the home's headline fee than by three applications: the council's financial assessment (capital above the threshold means paying in full — below it, means-tested support starts), NHS Continuing Healthcare, which covers the entire fee when the need is primarily a health need and is worth requesting a checklist for even if you expect a no, and Attendance Allowance, which is not means-tested and is missed by a great many families. If the home is the only asset, ask the council about a deferred payment agreement before selling anything.
