This is National Carers’ Week. What relevance does this have for brokers? Well, it’s an opportunity for them to tell their customers about the potential of equity release when it comes to allowing older people to live in their homes for longer.
Every year, more than 70,000 people are forced to sell their homes to pay for care. Many people would be able to stay in their homes if they could raise the capital to pay for care services such as nursing and monitoring plus a lump sum to cover any necessary home modifications. In turn, this would free up beds in care homes.
By using modern equity release schemes which offer more flexibility and assurance than products in the past, home owners could release cash from their homes with a guarantee that they would not have to make monthly repayments, and they would not lose their homes until both partners move into long-term care or pass away.
Pensioners own over 1trillion worth of property equity in the UK, which is equivalent to 32% of the nation’s wealth. This represents a huge asset which could be used to help people financially in their re-tirement. But equity release is not yet being fully utilised, mainly because home owners are not aware of what can be done with the product.
On one hand, elderly home owners are having to watch every penny as money re-mains locked in their homes while on the other, the care home industry is struggling, with most homes being full.
There is a reluctance on the part of the elderly to leave the comfort of their homes and move into permanent care.
In many cases, due to serious illness or disabilities, permanent care is inevitable. But a significant number of people would be happier to be helped to live in their existing environments if they could afford this. Equity release can be used to provide the financial resources to allow this.
Typical home renovations include installing bathrooms downstairs or as en suites and adapting houses for people with deteriorating mobility by adding ramps, wider halls, more open plan environments and lifts.
It’s not unusual for conversions to cost up to 30,000. But with the lower end of care home costs coming in at 20,000 per year, it’s a worthwhile investment to allow people several more years in the comfort of their homes with a good quality of life. By using lump sum equity release products combined with regular payments for services such as home nursing, ageing home owners can have the best of both worlds.
Helping Hands is a home care agency set up to support the elderly living in their own homes. It says this can help prevent the rapid deterioration of health triggered by the trauma of moving people out of their homes and communities and taking away their freedom.
Last year, it commissioned a study which found that over 75% of people believe live-in care would be a better option than residential care when they were made aware of the option. Alarmingly, fewer than 4% of people surveyed were aware it was an option.
The average cost of staying in a care home is now 33,000 per annum. A far cheaper solution for many people would be to get home help for a few hours a day. However, pensioners often have limited income and they do not consider using equity release to help them afford this kind of support.
“Arranging for the care of an older person is something most of us have to do at some point,” says Paul Cann, director of policy and research at Help the Aged. “It is concerning that there is still a lack of awareness of the options available and we hope this research will lead to more awareness of options such as live-in care.”
So how can brokers promote the role that equity release can play in helping people stay in their homes longer?
An obvious solution is to make contact with organisations such as Help the Aged and Age Concern. These organisations often know of people with these types of problems.
At a national level, they are generally supportive of the role equity release can play but at a local level their know-ledge and understanding of equity release is often limited and their perceptions of the product flawed.
This is because they don’t appreciate the improvements that have been made in the equity release industry. Time spent educating these organisations at the local level could be productive.
Contact could also be made with local firms that specialise in making changes to homes such as adding lifts and fitting mobility aids.
Contact with local care homes could also identify opportunities, say, to help one partner pay for the cost of keeping the other in a care home while they remain in the family home.
Another fruitful avenue is contacting local solicitors or accountants who may have contact with older people, for example, making wills or sorting out their financial affairs. Social organisations with high numbers of older people such as golf or bowls clubs could also generate leads. And brokers should research their own client banks to identify older home owners who could benefit from equity release.
Another approach is to market to the children of older home owners. These are often the people who are most affected by the needs of their parents. Getting children involved can also help overcome one of the barriers to older home owners taking out equity release plans as parents are often concerned about leaving inheritances.
Children are often concerned about ensuring their parents enjoy a comfortable retirement and do not want to see them either penny-pinching to make ends meet or moving out of the homes they have always lived in.
All in all, this week is a great opportunity to help older people and remind customers of the role that equity release can play in helping them to enjoy their retirement.