Paying for care homes

The care home market will continue to grow as the UK population ages, increasing the need for families to understand the options available and how they can pay for care.

This article explores the potential costs of care and how to pay for it.

Care nurse and patient

Do you need to consider care?

Individuals facing the onset of debilitating physical or mental illnesses, such as dementia, are often those most in need of care homes.

Other afflictions suffered by care home residents can include stroke and a lack of mobility brought on by severe arthritis or joint replacements.

If a family member is afflicted, relatives face a big choice: keep them in their property to be looked after by a relative, pay for an outside carer to visit, or move them into a care facility.

Paying for care at home

At-home carers can charge anywhere between £15 and £30 pounds an hour according to the UK Aged Care Guide. That's not too bad for someone who only needs assistance for a few hours a day.

If 24 hour care is needed this is called ‘live in care’, and typically costs from £800 per week.

How to get help with care at home

If someone is struggling with everyday domestic tasks you can apply to your local council for a care needs assessment. This will determine what can help the individual stay independent in their own home for longer.

You need to contact the adult social services department of your local council to request a care assessment. You can arrange this for a relative or friend, but they must agree to have the assessment. If you are currently caring for the individual, you can get a carer’s assessment to work out how the local council can support you.

For a care needs assessment or a carer’s assessment contact the social services department of your local council.

Care home costs

Paying for residential care can be expensive. The costs vary depending on the location, the care home itself and your personal circumstances. According to Age UK costs average around £600 per week for care homes and £800 per week for nursing homes.

Local authority funding for care homes

Your local council can carry out a care needs assessment which may conclude that residential care is necessary. They will also conduct a financial assessment, looking at your savings and income to understand your ability to pay for it.

You are expected to contribute towards the cost of care with any eligible income, minus £24.90 a week for personal expenses.

If your care needs relate to your health the NHS may contribute towards the cost of residential care. Find out more about NHS continuing healthcare on the Age UK page.

Financial support for care home care

If the local authority carries out a care needs assessment and decides that you need a care home place, a means test will follow to determine how much help you are entitled to. It covers savings and the value of owned properties.

If your savings and property amount to less than £14,250 then you are entitled to full financial support from your local council, minus contributions from your income. Some types of capital and some types of income are not included in the means test.

Property and savings threshold for care home fees

Savings and property value Local authority funding for care home fees
Over £23,250 None
£14,250 - £23,250 Partial
Less than £14,250 Full funding, minus income contributions

If savings and property amount to £23,250 or more then no public funding is available, you will be expected to cover the full cost of residential care yourself.

How to pay for residential care

For those with money in the bank, investing in an annuity that pays a regular income stream could be a better option than selling the family home. People moving into a care home can also consider a "deferred payment" agreement, where their local authority covers the cost of care upfront but recoups the money from the sale of their home after the person dies.

Should I use property to pay for my care?

You can use some of the wealth tied up in property to fund care costs, whether it's selling the home outright and downsizing, renting it out, or taking out an equity release product.

Equity release could come in handy if a relative needs to go into a care home but their spouse still wants to live in the family home. There are a number of pros and cons of equity release, but regardless of the situation it's important to consult a financial adviser to identify the plan that's right for you, or if another option better suits your circumstances.

The important thing to remember is that paying for care does not mean you need to sell your home – there are plenty of options available, equity release is just one of your options.

Note: We take care to ensure Talking Finance content is accurate at the time of publication. Individual circumstances can differ so please don’t rely on it when making financial decisions.

Pros and cons of equity release

Find out more