The Council of Mortgage Lenders has said that nearly half of all equity release customers have seen their benefits affected after taking out the product. They estimate that tax and benefits issues affect around 45% of lifetime mortgage cases, and will usually concern pension credit or council tax benefits.
The Council of Mortgage Lenders have developed software to compare the effects of different types of equity release schemes on tax and benefits, and also assesses whether the applicant is making full use of their entitled benefits. They would like to ensure that capital from equity release does not mean a reduction in people's benefits and have been lobbying the government about this problem.
Our view
Of course benefits are affected - but social services are only allowed to take them into account after a few years! Our view is simple, would you rather be living on the poverty line and claiming benefits in a house that you own, that then may get taken off you anyway if you need social care?
Or, would you prefer to have released some value from it so that you can enjoy life - i.e. have enough money so that you do not need benefits?
That said, the interaction of care fees, social care, social services benefits and equity release is extremely complex. N
eed advice only from people who have special qualifications for Long Term Care Planning and Lifetime Mortgages (equity release). Book a Free Callback from one of our advisers.