Using Your Home to Pay for Care: Equity Release & the Alternatives

For many families, the family home is the largest asset — and often the way care gets paid for. Here are the main options, from selling to equity release, with the pros and cons of each.

If your relative is a self-funder, their property can be used to meet care costs in several ways. None is automatically "right" — the best choice depends on whether they're moving permanently, whether a partner still lives at home, and what the family wants for the future. This guide explains the options so you can ask the right questions. It isn't financial advice: for anything involving borrowing against a home, you should take independent, regulated advice first.

First, check whether the home even counts

Before assuming the house must pay, confirm it's actually included in the means test. A person's home is usually disregarded if a spouse or partner — or, in some cases, a relative who is elderly or disabled — still lives there. England also gives a 12-week property disregard at the start of a permanent care-home stay, and Continuing Healthcare (if health needs qualify) ignores assets entirely. See our means-test guide.

The main options compared

Selling the home

The simplest route when a move is permanent and no one else lives there: sell, and use the proceeds to pay fees. It frees the full value and stops ongoing upkeep and bills — but it's irreversible, can take time, and means the property is gone from any inheritance.

Renting it out

Keeps the home in the family and generates income towards fees, and preserves the asset if the person may return. The downsides: rent seldom covers full care costs, you take on the responsibilities (and tax) of being a landlord, and rental income is counted in the means test.

Deferred payment agreement

A deferred payment agreement lets the council pay your care-home fees now, with the debt repaid later — usually when the home is eventually sold. It avoids a forced or rushed sale (handy in a slow market or if you'd rather rent it out meanwhile). The council secures the loan against the property and charges interest and administration fees, so it's a loan, not free money.

Equity release

Equity release (a lifetime mortgage or home reversion) lets a homeowner unlock cash from a property they continue to live in. That makes it largely irrelevant for someone moving into a care home — but it can be relevant when one partner needs care while the other stays at home, or to fund care at home. Be cautious: interest compounds and can erode the estate quickly, it can affect means-tested benefits, and early-repayment charges may apply. It's tightly regulated: only proceed with an FCA-regulated adviser, and choose a provider with the Equity Release Council's safeguards (like a no-negative-equity guarantee).

Care fees (immediate needs) annuity

A care fees annuity, or "immediate needs annuity", swaps a one-off lump sum for a guaranteed income paid for the rest of the person's life, usually straight to the care provider. Its great strength is certainty — it caps your cost no matter how long care is needed, protecting the rest of the estate. Its risk is timing: if the person dies soon after buying it, much of the lump sum can be lost (though some protection options exist). These are specialist products — use a regulated care-fees adviser.

Get the right advice

Because the sums are large and the decisions hard to undo, this is one area where paying for specialist advice usually pays for itself. Look for an accredited later-life or care-fees financial adviser (SOLLA-accredited advisers specialise in this), and consider legal advice on wills, power of attorney and property.