Paying care home fees will likely be one of the biggest considerations when deciding on a possible move into a care home. Average weekly costs range from £1200 for residential care and £1500 for nursing homes, significantly more for specialist dementia care. We have compiled “8 ways to fund care home fees” to help you save money and make the best decisions about care home funding.
If you are funding the care home place yourselves there are no easy hacks to save (significant) amounts of money on the fees. But, there are things you might consider to ease the financial burden. We’ve got 8 ways to help fund care home fees.
1. Know which care
Residential care homes provide care and support for your loved one, including medication. However, they do not have nursing/medical care on site, unlike a nursing home. There are also specialist care units in homes for those living with Dementia.
The price will be determined by the level of care required.
2. Research and room rates
When you visit a care home they may offer you a particular room at a specific rate. A bit like a hotel, there may be other rooms that are less expensive; a smaller room with less of a view or direct access to outside space for example.
Your search may start with a care home nearby or one recommended by a friend. Even if your parent or relative has a preferred option, it is worth comparing different care homes. Read their reviews and do your own research particularly in relation to what would make your parent happiest. Proximity to a local town for example, or perhaps the type of care home – purpose-built or smaller scale may determine the best solution which may impact the cost.
3. Read the contract small print
Your parent may well be required to provide evidence of ability to pay 2 years of fees. Be sure to read the small print of the contract with the care home before you sign. This should include their policy on fee increases. Particularly important is what is included in the weekly/monthly bill in terms of “extras”. Hairdressing, outings, GP visits may be additional to the regular fees.
If you do have to pay for extras on top at least you will know in advance and can budget accordingly. This may also influence your choice of care home from the start.
4.Benefits and allowances to offset care home fees
Are your parents and relatives claiming all the benefits and allowances that are available to them? There are ££ billions in unclaimed benefits every year – despite paying taxes for a lifetime some people are reluctant to accept money from the state. Along with eg the state pension, some benefits are applicable to someone living in a care home. Be sure to check out:
Personal Independence Payment
Personal Independence Payment (PIP) is money for people who have extra care needs or mobility needs. There are two parts: the daily living component, and the mobility component. Your parent may qualify for one or both of them. (PIP has replaced Disability Living Allowance (DLA) for people aged over 16).
If your parents/you are responsible for paying the care home fees your parent can continue to claim the PIP daily living component, currently up to £110.40 (25/26) per week (or the DLA equivalent). (In Scotland called the Adult Disability Payment living component).
This benefit would provide upto £440 per month to offset against the care home fees.
Attendance allowance
Anyone aged over 65 can claim Attendance Allowance if they have needed help with daily tasks and some care for at least 6 months prior to application. (If someone is terminally the claim can be made straightaway). Attendance Allowance is paid at two different rates, Standard rate of £72.65 and enhanced rate £110.40 (2025/26), and how much depends on the level of care needed. The standard rate can be claimed if your relative moves into a care home.
This benefit would provide £440 per month to offset against the care home fees.
You can’t claim both PIP and Attendance Allowance unfortunately, it will be one or the other.
6. Other funding solutions
There are options to help fund care home fees beyond draining the current account. Take financial advice from a Society of Later Life Advisors (SOLLA) accredited financial adviser, but considerations could include:
Immediate needs annuity – is an insurance product that can be bought by self-funders who are set to receive long term care. In exchange for a lump sum payment to an insurance company, the buyer is guaranteed to receive regular payments for the care that they need, for the rest of their life.
Equity Release – is a way of accessing the money that is stored in the value of the primary home, without having to sell up and move out. The most common type of Equity Release is a Lifetime Mortgage. As with a traditional mortgage, a Lifetime Mortgage is a loan against the value of the property. The older the homeowner is and the greater the value of the property, the larger the sum that can be borrowed. There is no time limit or end date to the loan, which is only repaid when the property is sold, following the death or move in to care of the last borrower.
Deferred payment agreement – is an arrangement with the local authority that lets people use the value of their homes to help pay care home costs. If eligible, the council will help to pay care home bills on behalf of your parent. Repayments to the council can be delayed until the home is sold, or after the death of your parent.
7. NHS Continuing Care for all care home fees
Arguably the holy grail of care home funding, NHS Continuing Care is when the NHS pays for all the care costs for someone whether they are at home or in a care home.
It is based on having specific “primary healthcare needs” which will be assessed in order to qualify. A diagnosis of for example, Dementia, will not in itself qualify someone for NHS Continuing Care.
Notoriously difficult to get, something of a postcode lottery, but it should certainly be a consideration in situations when someone has complex and ongoing healthcare needs.
8. Funding social care options
Unfortunately there is unlikely to be any long-term funding solution through Government policy until at least 2028. Previous government’s have attempted to bring in a “care cap” for funding, but this was finally abandoned in 2024.
Baroness Casey is currently undertaking an independent review of adult social care which includes funding. The initial review findings are due in 2026, but long-term funding options not until 2028.
Plan Ahead
The very best advice is to try and plan ahead should you feel that paying for a care home may become an option. Our comprehensive finance section gives you more information.
