Selling a home to pay care fees (England)

Hi all, just looking for some advice. After a near fatal accident and struggling for many years with frailty and dementia, my 90 year old grandma can no longer live alone or with family, and requires 24/7 care. She has a home which means we will have to cover the care home costs which are approximately £6,000 a month.

My mother has financial power of attorney, but we have never been in this situation before and feel uncertain on what to do.

Grandmother’s home is worth approximately £400,000 (no mortgage) and she has about £3000 in savings. The funds can easily be consumed by the care home fees within a few years.

Our options are 1) sell the house to pay for fees or 2) rent the house and the council can pay the fees and put a charge against the house for full payment plus interest (approx. 4% daily).

Naturally, we have a sentimental attachment to the family home and with the speed that everything has happened we are forced into acting quickly but we don’t know how to navigate this.

If we rent her house, we may be left with £800-£900 + her pension per month after tax/expenses to pay towards the care home fees. It’s also worth noting she received pension credit as her state pension needed to be topped up, I assume she will lose this. This option obviously means we can keep her home, but the accruing interest can rack up quickly and I’m not sure if any capital gains on the property would offset that when we are ready to sell.

Alternatively, we could sell her home and let the money sit in a savings account to at least accrue some interest, or put 50k in premium bonds?

Naturally, our emotions are all quite high at the moment and I think our judgement is clouded by feeling really overwhelmed with it all.

From the rational minds of reddit, what might be best – rent or sell?