Paying for Care as a Retired Homeowner: Understanding Your Options

For many retired homeowners, the family home represents security. When care needs increase, it is natural to worry about how those costs will be funded and whether savings or property will have to be used.

The good news is that there are structured, lawful options available. With the right advice, care can be funded in a way that protects stability and reduces uncertainty.

Understanding How Care Is Assessed

If you require care, your local authority will carry out a needs assessment followed by a financial assessment.

They will look at:

• Income (State Pension, private pensions, benefits)

• Savings and investments

• Property, in certain circumstances

If you receive care at home, the value of your property is not included in the financial assessment. If you move permanently into residential care and no qualifying dependent remains living in the home, the property value is usually taken into account.

This does not automatically mean you must sell your home immediately, but it does affect eligibility for council funding.

Benefits You May Be Entitled To

Owning your home does not automatically prevent you from receiving support.

Depending on circumstances, you may be eligible for:

• State Pension (continues as normal)

• Pension Credit (means-tested income top-up)

• Attendance Allowance (for those over State Pension age with care needs)

• Personal Independence Payment (PIP) (if under State Pension age)

• Personal Expenses Allowance (if the local authority is contributing to care home fees)

Attendance Allowance is not means-tested and does not consider the value of your home. A benefits review should always be carried out before making major financial decisions.

Using Property Without Selling Immediately

If residential care becomes permanent, there are structured ways to use housing equity responsibly.

Deferred Payment Agreement (DPA)

A Deferred Payment Agreement allows the local authority to place a legal charge against your home and defer payment of care fees until the property is sold.

This avoids forced sales and provides time for families to plan carefully.

Interest and administration fees apply, so the long-term cost must be understood.

Equity Release

Equity release schemes, such as lifetime mortgages, allow you to release funds while remaining in your home.

This option can affect entitlement to means-tested benefits and inheritance planning, so regulated advice is essential.

Care Fees Annuities: Creating Certainty

For some families, the greatest concern is unpredictability. How long will care be required? What if fees increase? What if savings run out?

A care fees annuity (also called an immediate needs annuity) is designed to remove that uncertainty.

How It Works

• A one-off lump sum is paid to an insurer.

• In return, the insurer pays a guaranteed income for life.

• Payments are made directly to the registered care provider.

• As long as care is needed, payments continue.

If structured correctly, payments made directly to a registered care provider are usually tax-free.

Why Some Families Choose This Option

• Guaranteed income for life.

• Protection against living longer than expected.

• Reduced stress around investment performance.

• Clear, predictable funding structure.

The cost depends on age and health. Poorer health can result in a lower purchase price because life expectancy is factored into the calculation.

Specialist Advice Is Essential

A care fees annuity is irreversible once arranged. It must be assessed within the context of the individual’s full financial position, estate planning and care trajectory.

Advice should come from a regulated financial adviser accredited by SOLLA (Society of Later Life Advisers). SOLLA-accredited advisers specialise in later-life financial planning and care funding.

This is not an area for general financial advice.

Planning Early Makes a Difference

The earlier care funding is discussed, the more options are available.

Practical steps include:

• Requesting a local authority assessment.

• Reviewing benefit entitlements.

• Obtaining specialist financial advice from a SOLLA-accredited adviser.

• Discussing long-term wishes with family.

Decisions made calmly and proactively are almost always better than those made during crisis. The same is true for choosing a care and wellbeing provider, and for making a financial plan.

How Thrive Homecare Can Support You

At Thrive Homecare, we understand that financial concerns often sit alongside emotional and practical challenges.

While we do not provide regulated financial advice, we help families:

• Understand care pathways.

• Clarify funding options.

• Liaise with professionals.

• Plan for care that supports wellbeing, independence and quality of life.

Care should not feel like a financial cliff edge. With the right structure and advice, it can be planned thoughtfully and sustainably.

If you would like to discuss your situation, our team is here to help you think clearly about the next steps to ensure your wellbeing and peace of mind. Contact Us.

This information is provided for general guidance only and should not be relied upon as financial advice. Always consult a regulated financial adviser before making any decisions regarding your finances or care funding.