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EquityCare wants small drawdown for home care

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Equity-release specialists have called on providers to develop products for the home care market which allow customers to draw down smaller amounts.

A drawdown scheme is a type of lifetime mortgage where customers can release chunks of the maximum amount a provider has agreed to lend instead of receiving the full amount at the outset. Providers will typically release a minimum of £10,000 at a time.

EquityCare chief executive Tim Eadon (pictured) is calling on providers to launch schemes that allow people to release smaller amounts to fund home care.

He says: “It is great talking about equity release with the domiciliary care market but if you have not got a product that works in that market, it is not helpful.

“The problem is the lowest loan anyone will give is £10,000. For the domiciliary care market, that is way more than people need to start with, so we need a product that will let homeowners release smaller amounts.”

Independent Equity Release Advisers Alliance spokesman and IFA Dermot Brannigan says: “It can be expensive to draw down £10,000 at a time. Being able to release a smaller, regular amount of money would probably be a good idea when people get to retirement.”

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Comments

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  1. I agree that equity release products more finely tuned to the domiciliary care market are needed. However, a typical client at Bower Retirement Services referred by IFAs specialising in care fees planning, requires on average £3,000pm. So an initial £10,000 will quickly be depleted once you take legal costs and arrangement fees into account.

    What we really need, is for providers to make payment directly to the CQC registered care provider, much like the Immediate Needs Annuity providers do. That, coupled with variable release amounts as Tim said, would be helpful.

    Simon Chalk
    Equity Release Planner
    Bower Retirement Services

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