Paying for care
- 80 years old
- Moved out of her primary residence
- Now living in residential care
- Needs to fund care costs
Maria moved out of her property and into residential care in May 2013 and her property has been rented out with a 12 month Assured Shorthold Tenancy (AST) agreement since April 2014. She needs to raise some capital to pay for her care, but doesn’t want to sell her property because it provides a rental income.
Traditional lenders will not lend to Maria because she’s already in care, so she was concerned that she was going to have to sell her property.
By taking out an Over 55 Buy-to-Let mortgage she can release money from her property. She does not need to make any repayments, and she can use all of the cash to fund her care.
Her property is worth £450,000 so she can raise up to £175,500. She can raise this in one lump sum, or she can borrow a smaller amount up front and borrow more in instalments by taking out further advances when required. She continues to receive a rental income, which can also support her care fees.
Maria is therefore able to keep hold of her income generating family home, with no affordability checks or minimum income requirements. At the same time, she and her family still have the flexibility to sell the property and release the remaining equity in the future.
- Pay for care and still pass on family home to children
- Loan does not need to be refinanced during her lifetime
- She still owns an income-producing asset
- Security of a fixed interest rate for life
These case studies are worked examples and are for illustrative purposes only. Your customers will need to seek their own tax advice and you or your customers should not place any reliance on the figures illustrated in this case study.
Canada Life is not responsible for the suitability of any of the statements made in the case study, or for any financial advice you receive. We have taken care to ensure the information is accurate, but we accept no liability for any of the information we provide that you decide to use. Figures and tax rates correct as at April 2017. Past house price growth is not a reliable indicator of future growth. The value of property may go down as well as up.
Find out more about our Over 55 Buy-to-Let Options here.