Support for self-funders

Deferred Payment Agreement

If the result of your financial assessment is that you must pay the full cost of your residential care but you cannot afford to pay the full weekly charge due to your capital being tied up in your property, this doesn’t mean you have to sell your home. You could ask us for a deferred payment agreement.

How a deferred payment agreement works

A deferred payment agreement is a type of loan that property owners can use to pay for their care or nursing home.

You are not given a lump sum upfront, instead we pay the part of your residential care bills that you can not afford and charge you interest on that amount.

You’ll use your house as security and we’ll make a legal charge against it - this guarantees we’ll be repaid any money due to us when you sell your property.

You do not have to sell it in your lifetime, you can choose for it to be sold after you have died. You can also repay us from another source if you want to.

Before securing any loans against your home, it is important to think carefully and get financial advice.

You will still be responsible for paying the weekly contribution that you have been assessed as being able to pay from your income and other savings.

Administration and interest charges

You will be charged:

• an admin fee of £218 to set up your loan
• a small amount of interest on the amount you owe - the current interest rate (from 1 July 2022) is 1.55%

Interest is calculated daily, based on an interest rate set by the government. It is reviewed twice a year on 1 January and 1 July.

Who this applies to

To qualify for a loan, you must:

• have had a needs assessment that shows you need to be in a care home or nursing home permanently
• have £23,249 or less in savings and investments
• own part or all of a property that was your main or only home
• have written permission from any joint owners of your home (only your share of the property can be used as equity for the loan)
• make sure your home is registered with the Land Registry
• be able to make your own finance decisions, or have a legally appointed financial representative who can make decisions for you
• have enough equity in your home to cover at least 12 months of care costs
• have a responsible person willing and able to keep the property in good condition so that it does not lose value
• be able to insure your property at your own expense

If your partner is in a care home too

If you jointly own your property, and both you and your partner are permanently in a care home, you may both apply for a separate deferred payment agreement.

Your agreement will be based on just your share of your home, but there must be enough value in your home to cover the care costs of both you and your partner.

Mortgages, loans and equity release on your home

If you have other outstanding loans, mortgages or equity release schemes on your home, it is unlikely we can offer you a deferred payment agreement.

How to enter the deferred payment scheme

If you qualify to use the deferred payment scheme, this option will be discussed with you during your financial assessment appointment.

If you have a legal representative, for example a power of attorney or deputy, they should also be present at your financial assessment.

What you’ll need to do

If you would like to use the deferred payment scheme, please advise your support worker. They will help you, and/or your legal representative, to complete an application form.

You will also need to supply us with:

• photo identification of you (or your legal representative), such as a passport or driving licence, that has been certified by a professional
• original property deeds - if your property is not registered with the Land Registry
• an up-to-date property valuation of your home
• proof of legal status of your financial representative - this should be the original court paperwork (that we will return to you)
• death certificates of any deceased people still named on the title deed of the property

By signing the application, you will enter a legal agreement with the council. The agreement will include any responsibilities you’ll have while it is in place, such as to make sure your home is insured and maintained. It will also cover our responsibilities as the lender.

What happens next

Once the application has been completed, and all relevant proofs supplied, our legal department will place a legal charge on your property.

Please be aware that this process can take some time.

When the legal charge is in place, we will get in touch with you, or your legal representative (where relevant), to ask you to complete any remaining paperwork and advise of the next steps.

Maintaining your property

We understand that maintaining a property costs money, even if you are not living in it. We’ll take this into account when we decide how much you must pay towards your care costs.

We do this by setting your contribution at a level that allows you to keep a minimum amount of income each week. This is called disposable income allowance and is set at £144 a week.

This allowance gives you enough money to pay for:

• home insurance
• energy bills
• maintenance costs

You can choose to contribute more towards the cost of your care and keep less than £144 a week if you prefer. This would reduce the amount of money you borrow from us. If an unexpected expense occurs, you can increase the amount you keep up to £144 at any time.

Renting your property with a deferred payment agreement

You may rent your property while having a deferred payment agreement as long as you use any rental income to pay towards your care home fees. This will mean you borrow less money from us. You must notify us if you plan to rent your property.

How to end the loan agreement

You can end the loan agreement at any time by either:

• paying the full amount due to us and arranging your own care - the legal charge would then be removed from the property
• selling your property and repaying the full amount due to us

Otherwise the agreement will end when you die. Interest will continue to accrue until the debt is paid in full from your estate.

Last updated 13 November 2023