Partnership launches new equity release-style loan

Financial services provider Partnership has introduced an equity release-style loan that gives homeowners the option of paying for care without having to sell their homes.

The new care plan payment option (CPPO) is a mortgage with a 6.99% interest rate. The interest is calculated on a daily basis and added to the loan each month, which means there are no repayments to make during the life of the loan.

The CPPO is used to purchase a Partnership care plan, which provides a level of guaranteed income for the life of the policyholder. The loan and interest becomes payable when the property is sold, usually when the policyholder dies, and the proceeds of the sale are used to repay it. The loan comes with a no negative equity guarantee, so the loan payment can never exceed the proceeds of the sale.

Chris Horlick, managing director of Partnership, said: “For many people, the most realistic way to fund care home fees is through the sale of the family home. The CPPO also gives the property owner the flexibility to rent out their property while they are in care or let a member of their family or friend live there for the duration of their stay in care, subject to Partnership’s agreement.

“Whilst the property must be vacated at the time the CPPO completes, the loan enables the property owner to rent out the property once the CPPO loan has completed. There is also the option to return home should the services of a care home no longer be required.”