The impact of the credit crunch seems to be taking its toll on all sectors of society in the UK, including the elderly.

A recent report from Saga has claimed that an increasing number of old people are being forced to take out secured loans on their homes in order to be able to pay for long term care fees and nursing home fees, as they are finding it increasingly difficult to sell their homes in the current economic conditions.

In the past when an elderly person has gone into long term care, the normal course of action is for them to sell their home and use the funds released to pay for the care fees.

However, with the property market standing still at the moment, this is no longer an option and for a large number of people who do not have a sufficient level of savings to pay their bills, the only option is to take out a secured loan on their home and as most banks and building societies will be unlikely to offer a loan of any kind to someone in this position, they will be forced to approach their local council for a secured loan.

A lifetime mortgage, or equity release loan, will not be an option in this situation either. Although this type of secured loan is becoming increasingly popular and usually doesn’t require the borrower to make monthly repayments, one of the requirements of the loan is that the borrower must be living in the house and if they enter long term care, the house must be sold and the loan repaid, placing them right back with the original problem they started with.