What Happens to Equity Release If I Go into Care?

What "long-term care" means in this context

The repayment trigger is specifically permanent entry into residential or nursing care — meaning you have left your home and moved into a care facility on a long-term basis with no intention or realistic prospect of returning to live in the property.

The following situations do not trigger repayment:

• A stay in hospital, however long
• Short-term respite care
• Temporary rehabilitation in a care setting after illness or surgery
• Having a live-in carer at home

The distinction is important and is defined in the mortgage terms. If there is any uncertainty about whether a particular situation constitutes permanent entry into care, the lender should be contacted to clarify their position.

The repayment timeline

Once permanent entry into long-term care is confirmed, the loan becomes repayable. Most Equity Release Council-approved products allow up to 12 months for the property to be sold and the loan repaid. This mirrors the same 12-month window that applies on death.

The lender should be notified as soon as the move to permanent care occurs. Interest continues to accrue during the repayment period, so the outstanding balance will be slightly higher at the point of repayment than at the point of moving into care.

The property is typically sold on the open market. Any surplus after repaying the outstanding loan and accrued interest is returned to the borrower or their estate. The no-negative-equity guarantee ensures that no debt can pass to the estate if the loan has grown to exceed the sale proceeds.

Joint plans — when one partner goes into care

On a joint lifetime mortgage, repayment is only triggered when the last borrower enters permanent care. If one partner moves into a care home but the other remains living in the property, repayment is not triggered. The remaining partner continues in the home on exactly the same plan terms as before.

This is an important protection. Many couples take out joint equity release precisely because it ensures that one partner entering care does not force the other to leave the family home or sell up. The loan simply continues until the second event — the second partner either dying or entering permanent care — occurs.

For more on how joint plans work, see: Can couples get equity release together?

Care costs and property wealth

It is worth being aware of how local authority care funding assessments interact with property wealth. If you require local authority funding for care costs, your property is generally included in the financial assessment — which means the property (and any equity in it) may be used to fund care before local authority contributions begin.

This is a complex area and the rules can vary depending on circumstances, including whether a spouse or other dependent remains living in the property. The general rule is that a property is disregarded in the care funding assessment if a spouse, civil partner, or certain other qualifying residents continue to live in it.

The interaction between equity release, care funding, and benefits is an area where specialist advice is particularly valuable. See also: Equity Release and Benefits.

Planning ahead

Some people take equity release specifically with the intention of using the funds to pay for private care in later life — either at home or in a care facility. This is a legitimate use of equity release, and taking the money in advance can provide reassurance about having funds available when needed.

If this is the purpose, a drawdown facility may be particularly useful — setting up a reserve to draw from if and when care costs arise, rather than taking a large lump sum that may not be needed for years. For more on this approach, see: What is drawdown equity release?