Deferred payment agreement for homeowners
When you’re permanently moving into a care home that is organised and paid for by us, you can let us know if you're interested in a deferred payment agreement.
A deferred payment agreement is a type of loan for homeowners to help pay for care home costs. It is for people who cannot afford to pay for care because all of their money is tied up in their home.
Read more about how deferred payment agreements work on MoneyHelper
Before securing any loan against your home, you should get independent financial advice.
Who can qualify
To qualify for a deferred payment agreement, you need:
- results from a care needs assessment that show you need to live permanently in a care home
- to have less than £23,250 in other savings and investments, not including your home
- to own or part own a property that isn’t benefitting from a property disregard
What we mean by property disregard
When you’re moving into a care home that is organised and paid for by us, we don’t count the value of your property for the first 12 weeks. We call this the 12-week property disregard.
Who can't set up an agreement
We can't arrange a deferred payment agreement with you if your property will continue to be the home of any of the following people after you’ve moved into a care home:
- your partner or spouse
- a close relative aged over 60
- a relative aged under 60 who is incapacitated
- a divorced or estranged partner who is a lone parent
- a child under 16 who is maintained by you
This is because your home will not be counted as an asset as part of the financial assessment.
How a deferred payment agreement works
You will not get a fixed sum of money like a normal loan. We pay an agreed amount every week towards the cost of your care on the condition that you’ll repay us when you sell your home. This might be when you choose to sell your home or after you’ve died. You can also repay us from another source if you want to.
Interest charges
We charge interest on your loan and secure it against the value of your home. The maximum interest rate is fixed by the government. This charge is based on the cost of government borrowing and will change on 1 January and 1 July every year.
What it costs
To arrange the loan, you’ll need to pay to:
- register your property with the Land Registry
- get a formal valuation of your property
- be able to insure your property
- keep the property in good condition to retain its value
There is also a one-off legal cost to cover the council's costs.
Terms of agreement
- You must meet the above criteria to apply for this scheme.
- The valuation of your property must show that there is enough equity to cover any outstanding debt that would be accrued.
- We must also be able to obtain a first or second legal charge on your property. Your application will be refused if we are not able to do this. We will not accept any other securities.
- Read the full terms of the agreement for deferred payments on GOV.UK (chapter 9).
Help to arrange the agreement
You will need to be able to make your own financial decisions or have a legally appointed agent willing to agree to this. You will need to sign the form if you are able to.
If you need someone to help you with your financial assessment, you could ask:
Get financial advice from an expert
We are not allowed to give you any advice about your money and paying for care. We strongly recommend seeking independent financial advice from an expert.
You can speak to the Society of Later Life Advisers (SOLLA) by calling 0333 2020 454. They may charge a fee for their services.
How to tell us you're interested
You can let us know if you'd be interested in making a deferred payment agreement when you complete your financial assessment.