Depending on your care needs and your level of income, sometimes you have to sell your property to afford the costs of a care home.
Here are some of the mistakes to avoid.
Assuming you have to sell your property
Selling your home, a place you have lived in for most of your life, is an understandably difficult decision. It holds tons of memories or your family might need it.
But it’s not always that you have to sell your home. So don’t start the process before you are sure that it is the only option on the table.
When you decide to go into care, the local council will first assess your care needs. If they determine that a care home is the best option for you, they will do what’s called ‘means testing’.
It’s a financial assessment to determine how you’ll cover the costs of social care.
They look at two things in particular: income and capital.
Income is any money you receive regularly including pensions or benefits. Capital includes any wealth held up in savings, investments or assets like your home.
If you get a higher income than the care home fees, you’ll cover the costs yourself.
Similarly, if your capital is above £23,250, you’ll be responsible for all care costs. This amount may include the value of your house, meaning you have to sell it.
There are however exceptions where your home is not included in a financial assessment.
- You have a partner or a close relative who is elderly (over 60 years) or incapacitated who live in your property. That is, it’s their only or primary home. Your property will be automatically disregarded.
- You are planning a temporary stay in the care home.
- Any reason the local council finds satisfactory enough to disregard your home. E.g. You have a friend or relative taking care of you and that’s their only home.
Selling in a rush
If the local council decides that you have to put your property in the market, you’ll have plenty of time to do it.
There is no need to rush through the process, which could lead to costly mistakes.
The local council must apply a 12-week property disregard.
This gives you time to prepare the property and put it on the market. During this time, you may be eligible for financial help from the local council.
But you’ll only get help for 12 weeks or until the property sells, whichever comes first.
You’ll also have to contribute your income and money from any other assessed capital towards your care home costs.
Selling your home before your preferred time
If you don’t mind selling your property but don’t want to do it immediately, there is an option called a deferred payment agreement.
The local council will pay your care fees but recoup the costs later when your property sells.
This arrangement is ideal for those who want the house to be sold only after they die.
You can also take advantage of it if you have a friend or relative living in the house but they are not covered by an automatic property disregard.
Worrying that you won’t sell your property in time
Don’t get yourself all anxious because you are worried you won’t be able to sell your property on time.
If you think the 12-week disregard is not enough time to prepare your home and put it on the market, ask the local council if you qualify for a deferred payment agreement.
They will pay your care home fees for you and recoup them later when your home finally sells.
Alternatively, get a bridging loan. This is mostly similar to a differed payment agreement except that the council pays the money to you rather than directly to the care home.
Selling a home you jointly own with someone
Even if it’s your name on the title deed, you may still not get all the proceeds from a future sale.
If someone else contributed to the purchase price or mortgage or paid for renovations and repairs, they are eligible for part of the proceeds.
So you can’t just sell your property and use all the money to pay for your care costs.
The same applies if you actually co-own the property with someone.
In either case, the local council will assess only your share of the property.
Giving away your home to avoid paying for care
If you deliberately gave away your home to avoid paying for care, the council may still choose to consider the property as yours and include it in their financial assessment.