Expert VerifiedWhat Happens to Equity Release After You Move Into Long-Term Care?
- Last Updated: 23 Oct 2025
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Be aware. Equity release comes with drawbacks which are important to think about. Lifetime mortgages are secured loans. Compound interest means the amount you owe can grow quickly. Equity release reduces your estate's value and may impact means-tested benefits.Key Takeaways...
- Moving into long-term care does not alter your equity release plan, and access to funds continues under the existing terms, though adjustments may apply based on your residency status.
- The equity release arrangement typically stays in place, but the requirement to live in your home could influence the continuity of the plan.
- If long-term care necessitates a permanent move from your home, this could trigger and activate changes to your equity release terms — likely as stipulated in your plan.
You may have reached the age for equity release where you are thinking about what happens to your equity release after long-term care.
Equity release can provide a financial lifeline to fund needs that can support at-home necessities or a move into residential care; according to Age UK, over 400,000 people live in care homes in the UK with fees that average £900 per week for residential care and over £1,000 for nursing care.1
At EveryInvestor, we’ve extensively researched how equity release interacts with long-term care funding, so you can make informed choices when planning for later life.
Read on to explore the key considerations and potential benefits of going this route...
What Is Home Equity Release?
Equity release, intended for those 55 and over, enables homeowners to monetise the value in their property through options like lifetime mortgages and home reversion plans.
Among these, a home equity release mortgage, commonly referred to as a lifetime mortgage, allows borrowing against your home, with repayment due when the house is sold.
This strategic choice is perfect for addressing long-term financial needs or making significant purchases in retirement.
On the other hand, home reversion involves selling a part of your home for immediate cash or an income stream, whilst maintaining your living space.
What Happens to My Equity Release If I Need Long-Term Care?
If you require long-term care and have an equity release plan, the situation surrounding your property may alter depending on your care needs.
Depending on the plan, you may be able to move into a care home, with the property sold and the mortgage repaid from the sale proceeds.
Remember, the equity release provider will typically reclaim the loan upon your house sale, which may leave less inheritance for your beneficiaries.
Alternatively, if you opt for at-home care, you can continue to live in your property.
Some equity release plans, especially lifetime mortgages, are very flexible and allow you to continue living at home whilst receiving care.
However, you must keep in mind that the equity release loan will continue to accumulate interest which could significantly reduce the value of your estate over time.
It is crucial to seek professional advice to understand all implications before making a decision.
Learn More: What You Can Use Your Equity Release Funds On
Will It Matter What Type of Equity Release Plan I Have?
Yes, it will matter what type of equity release plan you have, as lifetime mortgages and home reversion plans are structured differently.
Lifetime mortgage...
If you have a lifetime mortgage and go into care, the people taking care of your affairs will have up to a year (depending on what your agreement says) to sell the house to repay your mortgage and interest.
Using a lifetime mortgage can result in accumulating interest, reducing your beneficiaries' inheritance.
Home reversion...
A home reversion plan works differently, because you have sold a share or the whole of your property to the lender in return for living in your home rent-free or for a nominal rent until you pass away or go into care.
The lender will sell your house and split the proceeds according to the shareholding.
Keep in mind that with a home reversion plan, you may not receive the full market value for your property, and you lose the potential for future property value appreciation on the sold portion.
When choosing an equity release provider, ensure they comply with the Financial Conduct Authority (FCA)1 regulations and adhere to the FCA's Principles for Business, which include conducting business with due skill, care, and diligence, and treating customers fairly.
In other words, ensure they are authorised and regulated in the UK by the FCA.
Single vs. Joint Equity Release: What Is the Difference When Entering Long-Term Care?
The difference between a single and a joint equity release plan when you go into long-term care is that with one of these types of plans, your spouse will be able to continue living in your home once you have entered a care facility.
Single equity release plan...
With a single equity release plan, if you are the sole signatory on the loan and you are the one going into care, your partner or spouse and any other people living in the house will need to move out when the property is sold.
The same applies if your partner or spouse is the individual plan holder and they go into care, in which case you and any tenants or family will need to move out.
Joint equity release plan...
With a joint equity release plan, you and your partner or spouse jointly own the property and will have signed the equity release plan together.
This means that when one of you goes into long-term care, the other partner will be able to remain in your shared home until the second partner also goes into care (or passes away).
If you are both going into care at the same time, the equity release plan will come to an end and the house will be sold.
What Happens When My Equity Release Plan Ends?
What happens when your equity release plan ends is that your next of kin, or whoever has your power of attorney2, will bear the responsibility of selling your property to repay your lifetime mortgage.
It is crucial to inform your lender about your situation, as they need to be aware of any changes in your circumstances that may affect the equity release plan.
Early repayment penalties will not apply in this case, as the plan will have come to it's intended end.
Whoever handles your affairs will take care of the entire sales process, from appointing an estate agent to concluding the sale.
This person will also have to manage the costs and ensure the lender is repaid.
Your lender will normally only get involved if the property is taking too long to sell.
How Long Will It Take to Settle My Plan?
How long it will take to settle your plan depends on how long it takes for your property to be sold and the lifetime mortgage to be repaid.
It depends on what your equity release plan stipulates, but lenders typically allow between six and twelve months for a property to be sold in order for a lifetime mortgage to be repaid.
Interest on the lifetime mortgage will continue to accrue until the loan is repaid, so it is in the best interest of everyone involved for the property to be sold as quickly as possible.
Can I Keep Any Balance From My Property’s Sale to Use When in Long-Term Care?
Yes, you can keep the balance from your property’s sale to use when in long-term care, because once the property is sold and the mortgage is paid, any remaining money is yours to use however you wish.
Common Questions
After entering long-term care, the equity release plan will typically continue as usual.
However, there may be changes to how the loan is repaid.
Instead of making regular repayments or accruing interest, the loan may be deferred until the property is sold after you pass away or move into permanent care.
This is known as a “no-negative equity guarantee,” which ensures that you will never owe more than the value of your home.
Yes, you can still access equity release if you need long-term care.
In fact, many people use equity release to help finance their care expenses.
The process for accessing equity release remains the same, where you can release a lump sum or receive regular payments to supplement your income.
It is important to consult with a financial adviser to understand the potential impact on your care funding and eligibility for means-tested benefits.
Long-term care generally does not affect the terms of your equity release.
The terms and conditions of your equity release plan, including the interest rate and repayment options, remain the same.
However, the way the loan is repaid may change, as mentioned earlier, with repayment deferred until the property is sold.
It is important to review your equity release agreement and consult with a professional to fully understand any potential implications.
Long-term care does not impact the equity release process itself.
The process for releasing equity remains the same, involving an assessment of your property’s value, age eligibility, and the amount you can release.
However, the funds released through equity release can be used to cover the cost of long-term care, allowing you to access the value tied up in your home to finance your care needs.
After starting long-term care, there may be changes to how the equity release loan is repaid, as mentioned earlier.
Instead of making regular repayments, the loan may be deferred until the property is sold.
Additionally, if you receive means-tested benefits, accessing equity release may affect your eligibility.
It is crucial to seek professional advice to understand any potential changes or implications specific to your situation and ensure you make informed decisions.
No, your daughter can not continue living in your house if you go into care, as your equity release agreement requires anyone living in your home to leave when the house is sold to settle your lifetime mortgage.
If your partner or spouse is a signatory on your equity release and will be remaining in the home, your daughter can continue living there until your partner also moves into care or passes away.
Yes, equity release plans work for people who go into long-term care, as this type of loan can help fund their care and save them from having to sell their home, if they have a joint equity release plan.
The cost of care is based on a care needs assessment3 to ascertain the level of care needed.
A means test4, which is a standard procedure in determining eligibility for financial assistance, is included in the assessment.
You will be assessed as follows…
- If your capital is £23,500 or more, you will be expected to cover all your care expenses.
- If it is between £14,250 and £23,500, you will be expected to contribute some of the fees.
However, if one spouse remains in the home, the house’s capital value will not be included in calculations at this point.
Using equity release to fund long-term care may not be suitable for everyone, and it is crucial to explore all available options and speak to a qualified financial advisor before committing to this financial decision.
Your equity release plan will be affected if you go into a nursing home or an assisted-living facility for any reason by coming to an end if it is an individual plan (or if you are the surviving partner or spouse on a joint plan).
No, you will not leave your family in debt with equity release.
Because of the No Negative Equity Guarantee, no plan approved by the ERC will ever leave your family owing more than your house sells for.
Your property will not necessarily need to be sold to cover your equity release debt, but that is the most common way lifetime mortgages are settled once the borrower moves into care.
If you or your family decide you do not want to sell the property, it may be possible to repay the loan using other capital.
This will, of course, depend on the size of your equity release debt and whether you or your family have access to sufficient funds to repay the loan without selling your home.
Yes, you can use your lifetime mortgage to self-fund long-term care.
This includes funding home care.
You can take a lump sum and buy a care funding plan5, which will pay out a monthly guaranteed amount to your care provider.
You could also choose a drawdown lifetime mortgage, which would give you access to smaller amounts as and when you need money to pay for care.
Whilst using a lifetime mortgage to self-fund long-term care can provide flexibility, it may also increase the overall cost of care due to the interest accrued on the loan.
In Conclusion
Understanding the implications of entering long-term care on your equity release plan is essential for homeowners considering this financial option.
Whilst transitioning into long-term care can be a stressful process, it is crucial to notify your equity release provider, as this move may trigger the loan repayment process.
By seeking professional advice and carefully considering their personal circumstances, homeowners can make informed decisions regarding equity release after long-term care, ensuring their financial well-being and peace of mind.
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