Home · Compare options · CHIP vs equity release
Compare optionsCHIP vs equity release.
Both routes keep the family in the home. They differ on what the home is doing in return, how the funding is structured, and what the family actually inherits at the end. This page is a structural comparison only; it is not financial advice.
What each route actually does.
The Care and Home Inheritance Plan
Legal mechanism
A long lease is granted on the home to My Lifetime Care. The home is not a loan, and no debt accrues against it.
How the family is funded
My Lifetime Care pays the agreed monthly care costs (at home or in a care home), for as long as care is needed.
What recoups the cost
The home is let to tenants if your parent moves to residential care. Rental income and growth in the property’s value offset the care costs paid by the Plan.
Time limit
No cap, no time limit, no maximum borrowing.
What the family inherits
The home, preserved, in full.
Equity release
Legal mechanism
A loan secured against the home (lifetime mortgage) or a partial sale of the home in return for the right to remain (home reversion). The home is collateral.
How the family is funded
A lump sum or drawdown facility is paid to the family. Interest accrues on the balance (lifetime mortgage).
What recoups the cost
The home is sold at the end. The loan plus accrued interest is repaid from the sale proceeds. The family inherits what is left.
Time limit
Borrowing is capped by the loan-to-value of the home at outset. If care needs outlast the borrowing, the family is back to the means test.
What the family inherits
Sale proceeds minus the loan plus accrued interest. The home itself is sold to settle the debt.
Both are legitimate; the right answer depends on the family.
Equity release is a well-regulated, well-established route. We won’t pretend otherwise. The question is whether the Plan’s structural alternative is a better fit for your situation.
Equity release is often the right route when…
- The family wants a one-off lump sum and prefers a familiar regulated product
- The expected care journey is short or capped (a few years rather than decades)
- The family is prepared for the home to be sold at the end of the borrower’s life
- Other family considerations make a debt-on-property structure preferable to a lease structure
- The family wants FCA-regulated advice and the protections that come with it
The Plan is often a better fit when…
- The expected care journey is long (multi-year, dementia, complex needs)
- The family wants the home to pass intact at the end, not sold to repay borrowing
- The economics of a fixed loan-to-value cap don’t cover the likely care duration
- The home matters emotionally to the family, not just financially
- The family is comfortable with the legal-advice route rather than the FCA-advice route
Three differences worth understanding.
Equity release accrues it. The Plan doesn’t.
A lifetime mortgage accrues compound interest. Over a long care journey, the balance can grow significantly faster than the property’s value, eroding the family’s inheritance. The Plan is not a loan; nothing compounds against the home.
Equity release is capped. The Plan isn’t.
Equity release is capped by the loan-to-value at outset. If care lasts longer than the borrowing supports, the family is back to the means test. The Plan funds care for as long as it’s needed, structurally.
Sale vs preserved.
Equity release ends with the home being sold to repay the loan. The Plan ends with the home passing to the family. The family inherits the property itself, not the residual sale proceeds.
This page is a structural comparison and does not constitute financial advice. CHIP is not an FCA-regulated product; it is a service backed by a long lease. Equity release is an FCA-regulated product — lifetime mortgages and home reversion plans are within the FCA’s scope. Independent legal advice is mandatory for both routes; for equity release, regulated financial advice from an FCA-authorised adviser is also mandatory. Different protections apply.
A ten-minute call clarifies which route fits.
If your family is weighing this decision, the fastest way to get clarity is to talk it through with someone who can describe both routes in your specific circumstances.
Other ways to fund care, compared.
CHIP vs selling the home
The most common route. The Plan’s alternative: same care fees paid, home stays in the family.
CompareCHIP vs Deferred Payment Agreement
DPAs are council-administered. They defer fees but the home is usually left empty.
Read moreHow the Plan works
The four-step explainer. What happens at each stage, what protects your family.
