If you've worked out that you'll be paying for care yourself, the prospect can feel daunting at first. But "self-funding" doesn't mean facing it alone or without a plan. There are several well-established ways to fund care, and with a little knowledge and some careful thought, you can make confident, informed decisions that keep care sustainable for the long term.

This guide walks through the main options open to self-funders, from drawing on savings and pensions, to specialist insurance products, to releasing money tied up in your home. We've kept it clear and up to date for 2026, so you know what's on the table and what questions to ask.

One important note before we begin: most of the options here are significant financial decisions, and some are regulated products that legally require professional advice. Think of this as a friendly overview to help you understand the landscape, not financial advice itself. When it comes to making a decision, a qualified, independent financial adviser is your best friend.

First things first: claim what you're entitled to

Before committing your own money to anything, it's well worth making sure you're already claiming every bit of support available, because some of it isn't means-tested, which means your savings and income don't affect your eligibility at all.

A few to check:

• Attendance Allowance: for people over State Pension age who need help with personal care. It's not means-tested, and in 2026 it's paid at £72.65 per week (lower rate) or £108.55 per week (higher rate) depending on need.
• NHS Continuing Healthcare: fully funded care from the NHS for those with significant health needs. The bar is high, but if eligible it isn't means-tested and could save you a great deal.
• Local authority support: even if you expect to self-fund, it's worth requesting a financial assessment from your council, as you may qualify for a contribution.

It's surprising how many families pay for everything themselves without realising help was available. A quick check first can make a real difference.

Option 1: Savings, pensions and investments

The most straightforward way to fund care is from money you already have: savings, ISAs, shares, investments and pension income. For many families, this is the natural starting point.

If you find you need additional funds, a bank or building society loan is sometimes an option, but it's one to weigh up very carefully. Borrowing to fund ongoing care can become difficult to sustain, so think honestly about your ability to repay before going down that route. A conversation with a financial adviser here is genuinely worthwhile, as they can help you work out how to draw on different assets in the most sensible, tax-efficient order, and how to make your money last.

Option 2: Care fee annuities (immediate needs annuities)

A care annuity is a type of insurance policy designed specifically to pay for care. In exchange for a one-off lump sum, it provides a guaranteed income for life to put towards care costs, giving families certainty that the care will always be paid for, however long it's needed.

You may also see these called immediate needs annuities, immediate care plans or immediate need care fee payment plans. Before a plan is offered, the person's health and care needs are assessed, and the fee is set based on that assessment, with a view to covering the weekly cost of care, whether at home or in a residential setting, for as long as it's required.

Why families find them appealing

• Certainty for life. Once it's in place, the care is funded no matter how long it's needed, which removes the worry of money running out.
• Inflation protection. Plans can be index-linked, so payments rise over time in line with inflation.
• Capital protection on early death. This can be arranged so that, if the person dies sooner than expected, a percentage of the original lump sum is returned.
• Estate planning. Because you're paying a lump sum, you reduce the value of your estate, which may lower exposure to inheritance tax.

The important trade-off

A care annuity is best suited to situations where care is likely to be needed for the long term. It is generally not the right choice if care might only be temporary, because the plan usually can't be cancelled: you can't get a portion of the lump sum back if care is no longer needed due to recovery. It's a decision that rewards careful thought, ideally with a specialist later-life financial adviser who can model whether it stacks up for your circumstances.

Option 3: Equity release

For many families, the largest asset isn't in the bank, it's the home itself. Equity release lets homeowners (generally aged 55 or over) unlock some of the value tied up in their property while continuing to live there for as long as they wish. The money is usually tax-free and can be used for almost anything, including funding care at home.

There are two main types.

Lifetime mortgage

This is by far the most common form of equity release, making up the vast majority of plans. It's a loan secured against your home, and you keep ownership throughout. Generally, the older you are and the more valuable your property, the more you can release. Interest is charged on the amount borrowed, and you can either pay it monthly or let it "roll up" (be added to the loan) to be repaid when the home is eventually sold, usually after the last borrower dies or moves into long-term care.

A couple of points worth knowing:

• The cash released is tax-free, and with a roll-up plan there are no compulsory monthly repayments.
• Because interest can compound (you pay interest on the interest), the amount owed can grow surprisingly quickly over time. Many modern plans now allow penalty-free voluntary repayments, which can help keep this in check.

Home reversion plan

Far less common, a home reversion plan involves selling part or all of your home to a provider in exchange for a lump sum or regular payments. You keep the right to live there rent-free for life. The catch is that the provider pays less than market value for the share they buy, typically somewhere between 20% and 60%, depending on factors like age and health, because they may wait many years to see a return.

Crucial protections and cautions

Equity release is a major, long-term decision, and there are a few things every family should understand:

• It reduces the inheritance you leave behind, since the loan (and any rolled-up interest) is repaid from your estate.
• It can affect means-tested benefits. Releasing a lump sum increases your capital, which may reduce or remove entitlement to benefits like Pension Credit, and could even affect what a local authority charges for care. This is a key reason to take advice first.
• Always choose an Equity Release Council member. The Equity Release Council is the industry standards body, and its members follow a strict code of conduct. Crucially, this includes a "no negative equity" guarantee, meaning you (or your estate) will never owe more than your home is worth, and the right to remain in your home for life.

By law, you must take regulated financial advice, and independent legal advice, before taking out any equity release product. It's expensive and difficult to unwind once it's in place, so this is absolutely not a decision to rush.

Costs to budget for

Setting up equity release involves several fees, which vary between providers but typically include arrangement or application fees, a valuation fee, solicitors' fees, and potentially an early repayment charge if the loan is paid off early.

Which option is right for you?

Honestly, there's no single answer, and often the best approach combines more than one of these. Someone might draw on savings now, claim Attendance Allowance to top things up, and keep equity release in reserve for later. The right mix depends entirely on your assets, your family's wishes, how long care is likely to be needed, and what matters most to you, whether that's certainty, flexibility, or protecting an inheritance.

What's universally true is this: a good independent financial adviser, ideally one who specialises in later-life planning, is worth their weight in gold. They can look at your whole picture and help you choose a path that's both sustainable and right for your family.

We're here to help you plan

At Edyn, we know how much peace of mind comes from having a clear funding plan in place. While we're not financial advisers, our Family Care Advisors speak with families about these decisions every day. We can help you understand your options, talk through what live-in care actually costs, and point you towards the right specialist support so you can move forward with confidence.

Want to talk it through?

Whether you're just beginning to explore your options or you're ready to put care in place, our expert care advisory team would love to help.

Book a call online, or give us a ring on 020 3970 9900.