Deferred payment agreements explained

A deferred payment agreement lets the council pay your care home fees, and recover the money later from the value of your home. It means you do not have to sell your home in your lifetime to pay care home fees.

Who qualifies

• You are moving into a care home permanently
• Your savings, not counting your home, are under £23,250
• Your home is not ignored in the means test (for example, no partner lives there)

Councils must offer one to people who meet these criteria, and can offer it to others.

How it works

1. The council secures the debt against your home, usually with a legal charge.
2. You pay what you can from your income; the council pays the rest of the fees.
3. The amount owed grows over time, with interest.
4. It is repaid when the home is sold, or from your estate.

Costs

• Interest: councils can charge up to a national maximum rate, reviewed every six months.
• An administration fee to set it up.
• Councils can stop deferring when the debt reaches a set share of the home’s value.

Pros and cons

• Pros: time to decide about the home; no forced sale; the home can be rented out.
• Cons: interest and fees reduce what is left; the home must be insured and maintained.

Ask your council for details, read will I have to sell my house?, and compare equity release and care annuities.

This guide is general information about care in England, not legal, medical or financial advice. Rules and rates change; check with your council or an adviser before making decisions.