One of the biggest worries families face when arranging residential care is whether they will have to sell their home to pay for care. It is a concern we hear regularly, and understandably so. A home often represents a lifetime of memories, as well as being a significant financial asset.
Many families delay looking into care because they believe moving into a care home automatically means they have to sell the family home. In reality, the situation is often far more nuanced.
The good news is that selling your home to pay for care is not always necessary.
While some people do use the value of their home to fund care, there are a number of funding options available depending on an individual’s circumstances. Understanding how the system works can help you make informed decisions and avoid unnecessary worry.
This guide explains some of the main options available in England. It is intended as general information only and should not be taken as financial or legal advice.
Do you always have to sell your home to pay for care
Whether a property is taken into account when assessing how someone pays for care depends on several factors.
These include:
- Whether they are moving into a care home permanently
- Financial circumstances
- If anyone continues to live in the property.
If someone is moving into residential care permanently, the local authority may include the value of their home as part of a financial assessment. However, there are important exceptions, and many families are surprised to learn that a property is not always counted immediately or at all.
For example, if a husband moves into residential care but his wife continues living in their home, the property would normally be disregarded during the financial assessment. Similar protections may also apply where certain other qualifying relatives continue to live in the property.
If someone continues to receive care in their own home, the value of their property is not normally included in the financial assessment undertaken by the local authority.
Every situation is different, which is why it is important to understand the rules before making any decisions about whether you need to sell your home to pay for care.
Understanding the care home financial assessment
If you are seeking financial support from your local authority, they will carry out a care needs assessment followed by a financial assessment, often referred to as a means test.
The care needs assessment determines whether someone is eligible for local authority-funded care. If they meet the eligibility criteria, the financial assessment looks at their income, savings and, in some cases, property to establish how much they can reasonably contribute towards the cost of their care and whether the local authority will provide financial support.
Many people also pay for residential care privately, either in full or alongside financial support, depending on their individual circumstances.
It is important to remember that having a valuable property does not automatically mean you need to sell your home to pay for care.
Before making any decisions about selling a property, it is sensible to speak to your local authority or seek independent financial advice, as you may have funding options available that you were not aware of.
Deferred payment for care home fees
One option that can help avoid an immediate house sale is a Deferred Payment Agreement.
Offered by local authorities in England to eligible individuals, this arrangement allows care home fees to be paid on the person’s behalf using the value tied up in their property. The amount paid is then repaid at a later date, usually when the property is eventually sold or from the person’s estate.
A Deferred Payment Agreement is effectively a loan secured against the property, and interest and administration charges may apply. Not everyone will be eligible for a Deferred Payment Agreement, so it is important to discuss this option with your local authority if you think it may be suitable.
Other ways of funding care
Many people choose to fund their care privately using a combination of savings, pensions, investments or other assets. Some also explore specialist financial products designed specifically for later life.
One option you may hear about is a care fees annuity, sometimes called an immediate needs annuity. This is a specialist financial product that provides a regular income to help cover care costs for the remainder of a person’s life. Whether it is appropriate will depend on individual circumstances, and independent financial advice should always be sought before making any decisions.
Discover more about additional funding options here.
Be cautious about giving away assets
It can be tempting to transfer ownership of a property or give away savings in the hope of reducing care costs.
However, local authorities have rules around what is known as deliberate deprivation of assets. If they believe assets have been given away, transferred or otherwise reduced specifically to avoid paying for care, they may still assess the person as though they still own those assets.
Making significant financial decisions without taking professional advice can have unintended consequences, so it is always sensible to seek guidance before taking action.
Don’t be afraid to ask for advice
The care funding system can feel overwhelming, particularly when you are already supporting a loved one through a significant life change.
Although every financial situation is different, moving into residential care does not automatically mean you will have to sell your home to pay for care. Understanding the funding options available and seeking advice early can help you make informed decisions with greater confidence.
If you are unsure about your options, consider speaking with your local authority, an independent financial adviser with expertise in later life planning, or a solicitor specialising in later life matters. They can explain the options available based on your individual circumstances and help you make informed decisions.
Get in touch with the B&M Care team
At B&M Care, we cannot provide financial advice, but we can help you understand the care funding process, explain the different sources of information available and signpost you towards trusted organisations that can offer specialist guidance.
For more information, visit our Paying for Care guidance page, where you’ll find practical information about funding residential care, useful resources and details of our free educational webinars.
Alternatively, speak to a member of our friendly team, who will be happy to answer your questions and help you find the information you need as you plan the next steps.