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Equity Release If Have Dementia

Equity release is a scheme that was introduced to the UK in the 1960s. To begin with, there was a minimal selection of equity release plans, and they came with a huge amount of risk.

This has led to an avoidance of equity release by many eligible candidates. Many people still believe that this scheme is a scam.

However, equity release is now very carefully regulated, which means plenty of Brits find that there are more benefits than drawbacks when it comes to releasing money from their home.

These days, there are a huge number of equity release products on the market, from home reversion plans to income lifetime mortgages and interest only lifetime mortgages.

These products have unique regulations, so if one product doesn’t meet your needs, it is likely that another will.

It is not only over-55s in the UK who can benefit from equity release; this scheme is available to non-residents of other countries.

However, most European countries do not directly permit their residents to pursue equity release, so a UK-based company must facilitate this.

Please call our 24-Hour Helpline: 0330 058 1579

Who Can Release Equity?

Although the equity release scheme has changed significantly over the years, something that has not changed is the target demographic. Equity release providers only offer money to people who are aged 55 years old or above, and this is consistent across the market.

In the past, it was also difficult to take out equity if you were above a certain age, as many different equity release companies would set a maximum age limit, along with the minimum limit of 55 years old.

This has not changed completely, as some lenders still have an age limit in place. Yet, plenty of companies give loans to people over the age of 80, so there is more flexibility when it comes to the age of equity release consumers.

Another rule that has remained is that equity release customers must be homeowners. If you are renting, or you do not own your home outright, you will not be entitled to a loan. You need to be able to lend money that is secured against your property, which is only possible if you own the property.

Finally, the value of your property determines your eligibility for an equity release loan. The property valuation must show that your home is worth at least £70,000. If your property is much more valuable than this, you could borrow more money from your equity release provider.

Please call our 24-Hour Helpline: 0330 058 1579

Is equity release possible for people with dementia?

Yes, equity release is possible for people with dementia. However, not everyone with dementia will be able to take out equity, as it is dependent on several factors – mainly the mental state of the individual with dementia.

Before someone with dementia is approved for a loan, they will have assessments to determine the condition of their mental health. If it is determined that they are in sound mind, it will be much easier for them to release equity (though there may still be obstacles).

If the individual is not in sound mind, it is possible that their family can pursue equity release on their behalf (but this is determined on a case-by-case basis). In the event that their family is not permitted to do this, the applicant will have to look at other options for later-life lending.

Please call our 24-Hour Helpline: 0330 058 1579

What happens if I do not currently have dementia, but I am at risk for it?

In terms of eligibility for equity release, nothing is stopping you from getting a loan if you are not currently diagnosed with dementia, and you are of sound mind. However, you may want to plan ahead to ensure you would be in a comfortable financial position if you did end up developing dementia.

There is no right way to pursue equity release as someone who is at risk of dementia, but speaking to an equity release adviser can equip you with sensible ideas.

For example, they may suggest getting a power of attorney before releasing equity, getting a drawdown lifetime mortgage (so that the interest doesn’t build as much), or making a joint application so that someone else can manage the finances if you are one day unable to.

Are there any other health conditions that can make it harder to release equity?

The main concern with having dementia and releasing equity is that there is a risk of the customer being manipulated into equity release, or struggling to make sensible financial decisions after taking out equity. This means that health conditions in general (that do not affect cognitive abilities) are not usually a concern for equity release.

In fact, equity release can be even more beneficial for someone with a health problem. The enhanced lifetime mortgage often allows people with certain disabilities to borrow more money against their home, and to get a lower equity release interest rate.

If you take out equity as someone with a health problem, you could potentially use the loan to improve your health, or to make your life more comfortable despite your illness. For example, you could fund private health care costs, get an accessible form of transport, or have home renovations to make your space easier to navigate.

Please call our 24-Hour Helpline: 0330 058 1579

The benefits of releasing equity if you have dementia

Most of the benefits of releasing equity apply to people with and without dementia; you can borrow money without having to repay it, you do not have to leave your home, and you can qualify regardless of your income.

However, there are some aspects of equity release that are specifically helpful to people with dementia. One of these aspects is the fact customers do not have to give up their home.

Many people with dementia benefit from being in a familiar environment, and if they release equity, they can stay in their home until they pass away. This can give them some peace of mind as they battle their health condition.

If an individual with dementia lives near their family, by releasing equity, they can take comfort in the fact that they will never have to live far from their loved ones. Other retirement funding options, such as downsizing, do not come with this guarantee.

It is more likely that someone with dementia will need to access residential care at an earlier age than the average elderly person. Releasing equity can provide the individual with the funds to do this, if they do not currently have enough money saved for a care home or a live-in carer.

Finally, there can be concerns that someone with dementia will make financial decisions that lead to debt. If they release equity, though they would still owe money to an equity release provider, they would never be chased for payment.

This means they would be able to maintain a good quality of life regardless of how much money they owed.

Please call our 24-Hour Helpline: 0330 058 1579

The risks of releasing equity if you have dementia

We have already discussed the risk that an equity release applicant with dementia could be pushed into the decision by someone else. However, this risk is low, as equity release regulations are strict, and each case will be investigated to ensure the customer is releasing equity of their own will.

Aside from this, there is the risk that the person with dementia will handle their finances poorly, especially if their illness progresses quickly. Dementia is known to cause memory issues, and an equity release consumer whose memory is deteriorating may struggle to stick to a budget, or fail to pay bills on time (1).

We would argue that this financial risk is applicable without equity release; if someone with dementia is going to forget to pay their bills, it will happen with or without this scheme. Equity release could even protect them to an extent, as they would have access to additional funds.

Finally, there is a risk that someone with dementia will get into significant debt with equity release, and leave no money to their loved ones. This can be avoided by opting for inheritance protection and a no negative equity guarantee in the equity release application.

Please call our 24-Hour Helpline: 0330 058 1579

Will I lose my state benefits if I take out equity?

If you are claiming benefits because of your dementia diagnosis, you will continue to receive these funds when you become an equity release customer. For example, if you get Attendance Allowance, your income does not factor into your eligibility, so it is permitted for you to accept this money even after accessing an equity release loan.

Other benefits that will not be affected include: Disability Living Allowance (DLA), State Pension, Carer’s Allowance, Bereavement Support Payment, Personal Independence Payment (PIP), and new style Employment and Support Allowance (ESA).

However, for any means-tested state benefits, there is a risk that you will lose this money after releasing equity. Please speak to an equity release adviser about this, as they will look at your income and tell you whether it is above the threshold for state benefits.

Means-tested benefits include: Pension Credit, Council Tax Support, Income Support, Cold Weather Payment, Housing Benefit, and Universal Credit.

Please call our 24-Hour Helpline: 0330 058 1579

How can I release equity safely as someone with dementia?

You should plan to meet with a professional equity release adviser to discuss the benefits and risks of releasing equity as someone with dementia. They will advise you on the best course of action, taking into account your current health, and how your condition may deteriorate in the future.

Though it is not expected that you meet with an adviser multiple times, we would recommend doing this if it is within your budget. You can never get too much help with this decision, so meet with equity release specialists, financial advisers, and solicitors to talk through the possibility of releasing equity.

It would also be wise to look at the support you currently have, and decide on the people you trust to help you with equity release. Even if you want to fill out the application on your own, it can be useful to talk to your loved ones about their thoughts on equity release, their opinions on inheritance, and the possibility of getting a power of attorney.

Finally, make sure you are informed on the details of equity release, so you know how much money you can expect to receive. If you are only entitled to a small loan, and you have better ways to fund your retirement, spend time considering the wisest option with equity release experts.

Please call our 24-Hour Helpline: 0330 058 1579

Can I release equity on behalf of a family member who has dementia?

The strict equity release regulations make it tricky for individuals to release equity on behalf of a family member.

The best way to increase your chances of qualifying for a loan is to put a lasting power of attorney in place. It goes without saying that this isn’t helpful for someone whose family member is already dealing with severe dementia, but it could benefit people whose loved one is in the early stages of the illness.

With a lasting power of attorney or an enduring power of attorney, a trusted individual can release equity on behalf of the person with dementia, as they have been selected to make financial decisions for the individual.

Sometimes, people with mild dementia choose to release equity independently, but they implement a power of attorney to prevent future financial issues. They either do this before applying for equity release, or they apply to an equity release plan that comes with the option to get a power of attorney.

Please call our 24-Hour Helpline: 0330 058 1579

If my partner has dementia, can I make an individual equity release application?

It is possible to apply for equity release without including your spouse, but it is certainly not recommended in this situation.

If you took out equity, and you passed away before your partner, they would have to leave your home. The same situation would occur if you needed to move into long-term care before your partner; your property would be sold, and your partner would have to find somewhere else. Both scenarios could be extremely problematic for someone with dementia.

If your spouse passed away before you, these outcomes would not apply, and you may feel content with your decision to release equity. However, this is not guaranteed, so we do not recommend taking the risk.

Another option is to become an attorney for your partner, which means you could make a joint application for equity release, but you would take charge of the finances if your partner lost their mental capacity. This would allow your partner to remain in your home if you passed away first. However, there would still be a risk of your spouse making misguided decisions with the remainder of the loan.

Please call our 24-Hour Helpline: 0330 058 1579

What are the Alternatives to Equity Release If You Have Dementia?

One of the most common routes to take is to claim state benefits for dementia, and pair this money with the State Pension, as well as any private pension funds or savings that you have. This can be much less stressful, as the process is easy and cost-free. Yet, many people do not have enough money to fund their retirement in this way.

You could also downsize into a less expensive property, which would provide you with more money for retirement, including care home fees. This is a great way to avoid debt, but it is only beneficial if you find the right property, i.e., you are happy with the location, size, accessibility, etc.

To learn about other retirement funding ideas, have a look at our post on the various alternatives to equity release. Not all of these are recommended for people with dementia, so get in touch with us for individualised advice.

Get Advice For Equity Release If Have Dementia

We help homeowners over the age of 55 to take out equity from their home. Our clients include people with low incomes, poor credit ratings, and health conditions, such as dementia.

We are not an equity release company, so you cannot submit a loan application to us. However, if you send us your details, or call us on 0330 058 1579, we can equip you with expert advice on equity release, and answer any questions you have about the scheme.

To get the ball rolling with equity release, contact us today, and a friendly adviser will guide you through the process.

Please call our 24-Hour Helpline: 0330 058 1579


[1] Dementia may cause problems with money management years before diagnosis,early%20sign%20of%20the%20disease.

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