Carefree care fee planning?

zagfles

Linton wrote: »

Some major snags with your little scheme:
- You wont get a rolled-up lifetime mortgage for more than about 30% of the value of your house at 65
- Lifetime mortgage interest rates are significantly higher than those for normal pre-retirement repayment or interest only mortgages. There are only a small number of providers.
- I dont agree with your repayment calculations. 25 years at 5% compound interest amounts to a factor of 3.39 giving the repayment at death at 90 as £678000. Even if the mortgage was on an interest only basis the cost of the interest alone would be 25 X 0.05 X £200K=£250K
- The chances are that any care costs will be far less than the interest paid.
- What do you do with the £200K? You cant keep it as it would put you well above the £100K limit.
- Taking out a lifetime mortgage may significantly reduce your options well before you need care.

Yes some very odd maths in the BBC article!

woolly_wombat

Teaandscones wrote: »

Under the new system the value of the house will count so that there is likely to be a £200k charge against the house presumably increasing by RPI every year. Though she won't be homeless, she probably won't be able to move and if she lives another 10 years, inflation will probably have whittled the 100k left in the estate to nothing.

The underlying principle may be valid but this policy was not properly thought through.

I wonder why the polls are narrowing?!

A major error by the Conservatives.

kidmugsy

greenglide wrote: »

But the foot high headlines full of lies and drivel put out by the Mail and its friends are ok?

BBC generally puts both sides of the argument. The printed media tend just to put one side aimed at whipping up their target audience.

The papers aren't funded by a poll tax. And the idea that the BBC is even-handed is laughable.

zagfles

Teaandscones wrote: »

But not under the conservative proposals anymore.

Say a widow had been caring for her late husband for the best part of a decade with the assistance of carers but then for the last 3 years of his life he went into nursing care.

Under the current system, the value of the house would be ignored and after her husband's death she could then sell up and move to be closer to her grandchildren.

Under the new system the value of the house will count so that there is likely to be a £200k charge against the house presumably increasing by RPI every year. Though she won't be homeless, she probably won't be able to move and if she lives another 10 years, inflation will probably have whittled the 100k left in the estate to nothing.

AIUI only his half of the value of the house would count, so there'd be a charge on the house of max half the value minus £100k, eg for a house worth £400k there'd be a £100k charge.

Common sense would allow this charge to be moved to a new house, so if she wanted to move she could sell up and buy another house of the same value with the same £100k charge on it. Or, say, a £300k house and release £100k capital, and so get a £300k house with a £100k charge on it and £100k of cash. However that's common sense so it probably doesn't apply.

G4OJR

You can take out a whole of life policy to cover an inheritance tax liability so why not have one to cover social care costs posthumously?