Care Funding for the elderly

Posted on 11 March 2011 by Susan Roast

I am considering remortgaging my elderly mother's flat, which she owns, in order to fund her care. I am considering an interest only mortgage and am confident that my financial circumstances would enable me to guarantee the loan and repayments if necessary. (I am also looking at equity-release schemes, but feel a more "straightforward" remortgage might be simpler and more cost effective. Advise please.


When you say a straight forward remortgage I think you will find that this will be a lot more difficult to arrange than you imagine. All Lenders have a duty of care to their borrowers and this will present numerous obstacles to finding one who will consider your proposals.

First of all they will want to make sure that your Mother is not being forced to remortgage her property against her will and that she is mentally capable of making financial decisions. It might be necessary for you to obtain a Power of Attorney if not. Then there is her age, the vast majority of Lenders will only lend until she is aged 75 and will want the mortgage redeemed by then. Fortunately their are a few more 'enlightened' Lenders who have a higher age limit or none at all. Understandably you want to keep the costs down and are looking at an interest only mortgage, unless you have a separate repayment vehicle such as ISAs or a maturing life policy this will further reduce the number of Lenders as sale of property is only accepted by a few. We then have to consider affordability and you acting as a guarantor. This will further reduce the number of Lenders and will also depend on your own financial situation and ability to meet the monthly payments on top of any existing credit commitments you may have.

It might be that the only option left to you is to consider an equity release mortgage and there is one High Street Lender whose 'Retirement Homeplan' does require monthly interest payments. I do not believe they accept Guarantors but it would be worth exploring further. The remaining Equity Release products are based on the property value and your Mother's age. They do not require monthly payments and the interest is rolled up until the property is sold, either on your Mother's death or when she moves into Long term care.

I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and tell the consultant the date and title of your question. They will be able to look at your situation and advise you accordingly.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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