Equity release is designed to give homeowners aged 55 and over financial flexibility later in life, allowing them to unlock tax-free cash from their property while continuing to live in it. But what happens if your circumstances change—such as needing to move into long-term care?
In this guide, we’ll explain exactly how equity release works if you go into care, what happens to your loan and your property, and how to make sure your loved ones are protected.
What Happens to the Equity Release Plan If You Go Into Care?
If you have a lifetime mortgage, the most common form of equity release, and you move into long-term care, this is usually considered the end of the plan. At that point:
- Your home will typically be sold.
- The loan and any interest owed will be repaid from the proceeds.
- Any remaining value goes to your estate or beneficiaries.
If the plan is in your name only, the process is straightforward. If the plan is held jointly (e.g. with a spouse or partner), the plan only ends when both homeowners have permanently left the property.
🔗 More details: How Does Equity Release Work When You Die?
What If Only One Person Moves Into Care?
If the equity release plan is in joint names, and one person moves into care but the other continues living in the home:
✔ The plan remains active.
✔ No repayment is required.
✔ The remaining homeowner can continue living in the property for life or until they also move into care.
The loan is only repaid once the last surviving homeowner permanently leaves the property.
🔗 Related: Can You Take Out Equity Release on a Jointly Owned Property?
What If the Property Is Sold to Fund Care Costs?
If the home needs to be sold to fund care home fees:
✔ The equity release loan will need to be repaid from the sale.
✔ Any remaining proceeds belong to you or your estate.
✔ Thanks to the no-negative equity guarantee, you’ll never owe more than the property’s value, even if house prices fall.
🔗 More details: What Are the Risks of Equity Release?
Can Equity Release Be Used to Pay for Care at Home?
Yes. Many people choose to use equity release to fund care services in their own home, allowing them to stay in familiar surroundings and maintain their independence for longer.
✔ Funds can be used for private carers, accessibility upgrades, or home adaptations.
✔ The vast majority of plans allow for flexible drawdowns, meaning you only take money when needed—reducing interest over time.
🔗 Related: How Equity Release Could Help Fund Your Retirement
What Happens If There’s Not Enough Value in the Property to Cover the Loan?
If property values fall, or the interest has built up significantly over time, you might wonder what happens if the loan amount exceeds the home’s value.
✔ The vast majority of lenders offer a no-negative equity guarantee, ensuring your estate won’t be left with any debt.
✔ This protection is a standard feature of plans provided by members of the Equity Release Council.
Can You Repay the Loan Before Moving Into Care?
Yes—if you plan to move into care and want to settle the loan early, the vast majority of plans allow you to do so, although early repayment charges may apply.
✔ Some providers waive early repayment charges in specific scenarios, such as moving into long-term care.
🔗 Learn more: Can You Pay Back an Equity Release Mortgage Early?
FAQs: Equity Release and Long-Term Care
Does the plan end when I go into a care home?
Yes—if you’re the sole homeowner, your equity release plan typically ends when you move into permanent care.
What happens if I go into temporary care?
Most plans allow for short-term or temporary stays without ending the plan. Your adviser or lender will explain the exact terms.
Will my family inherit anything if I go into care?
Yes—any remaining equity after the loan is repaid goes to your estate. The vast majority of lenders also allow you to protect a portion of your home’s value for inheritance.
🔗 More details: Do I Need a Will with Equity Release?
Next Steps
If you’re considering equity release and want to understand how it would work if you move into care:
✔ Use our Equity Release Calculator to estimate your borrowing potential
✔ Speak to a specialist through our Equity Release Adviser page
✔ Read related guides:
- What is an Equity Release Mortgage?
- What Are the Pros and Cons of Equity Release?
Understanding what happens to your equity release plan if you move into care helps you make confident decisions about your future and protect your family’s interests.
