Pay off mortgage in full?

annedunlop

About 8 years ago I received a redundancy payment and was lucky enough to be able to pay off my mortgage. Recently I was told this was not a good thing to do and that I should have kept a small mortgage. Reasoning was, that if I had to go into residential care at some stage, the government could take my house towards payment, which they wouldn't be able to do if there was a mortgage attached to it. What concerns me are the implications for, not only myself and hubby but also my son who has special needs. Anyone know about this? Should I be worried?
TIA

lisyloo

Ok, I don't think what you have been told is correct.

Firstly the councils these days try to keep people in their own homes.
I have an aunt receiving visits 3 times a day, so getting out of bed, getting into bed etc.
It's cheaper and better for individuals as well.

Next, if you did need "personal care" as opposed to healthcare and you have assets, then you need to contribute.
This would be true whether there is a mortgage or not as a small mortgage means you have equity.

If there are people who need to live in the household then the house would not be sold.
This include over 65s, children, dependent adults etc.
So if you did not have the means to pay but had a home then a bill would accrue that would be reolved when the house is no longer needed.

So I don't think you should worry.
Certainly having a small mortgaage would make no difference.
It's not a basis for selling the house or not.

pamelab21

I am also sure that you can have the house put in the name of your children if you wanted to. As long as there is plenty of trust and they are not tempted to put you out of 'your' home. I am sure there are legal documents you can attach to this sort of thing?

lisyloo

I am also sure that you can have the house put in the name of your children if you wanted to.

You cannot deliberately "deprive" yourself of assets in order to gain state benefits.
So if you try to give your house away and then claim free long term care then the transaction can be "rolled back" i.e. the house taken OFF the children.
There is no time limit and there was recently a case that went back 18 years where a house was taken off a son.

If you want to google for more info the the correct term would be "deliberate deprivation of assets".

Also state care may not be ideal.
e.g. I've heard of married couples being in seperate homes.
If you do have assets then you might want to be thinking about private options.
You can for example do equity release to purchase long term care insurance.
I'm not saying that's the best idea, but it's an option if it's a concern.
You would need to get advice on this area.
Personally I'd want to keep my options open as state care can be poor.