Deferred Payments Scheme
A deferred payment agreement is an arrangement with the local authority that lets people use the value of their homes to help pay care home costs. I.If you’re eligible, we will help to pay your care home bills on your behalf. You can delay repaying them back until you choose to sell your home, or until after your death.
How does the Deferred Payments Scheme work
The Scheme is an arrangement that offers you a loan from Kingston Council using your home as security. It does not work in exactly the same way as a conventional loan – we do not give you a fixed sum of money when you join the Scheme, but pay an agreed part of your weekly care home bill for as long as is necessary.
- The part we pay is your ‘Deferred Payment’. The deferred payment builds up as a debt which is cleared when the money tied up in your home is released. For many people this will be done by selling their home, either immediately or later on. You can also pay the debt back from another source if you want to.
- If you do not want to sell your home you can decide to keep it and rent it out, the option of renting it out generates an income and repays what you owe out of your estate.
- If renting out your home, you will be expected to use the rental income to increase the amount you pay each week. This will reduce the weekly payments made by us, and minimise the eventual deferred payment debt.
What interest will I have to pay
- We will charge you a small amount of interest on the amount owed to us in the same way as/ money borrowed from a bank.
- This interest is set to cover the council’s costs and not to make a profit.
- The maximum interest rate that we will charge is fixed by the government and is based on the cost of government borrowing.
- The interest rate changes on 1st January and 1st July every year.
- Compound interest will be applied weekly from the day you join the scheme.
- We will send you regular statements advising how your charge is being calculated and how much of the outstanding sum on your deferred payment account remains to be paid.
Your agreement with us
- If you decide to use the Deferred Payments Scheme you will need to enter into a legal agreement with us and sign an agreement document.
- We then calculate a ‘legal charge’ and place this against your property to safeguard the loan, for which you will be charged £620.
- The agreement covers both our and your responsibilities.
- You are responsible for making sure that your home is insured and maintained.
- If you run up expenses in maintaining your home while living in a care home, these will be allowed for in the amount calculated for the weekly contribution from your capital (savings, stocks, shares, investments or other assets) and income.
- You can end the agreement at any time (for example if you sell your home) and the loan then becomes payable immediately.
- The agreement ends on your death and the loan becomes payable 90 days later.
- We cannot cancel the agreement without your permission
Advantages of using the Deferred Payments Scheme
- The main advantage is that you don’t have to sell your home immediately if you need to move into a care home.
- You can take your time to decide where you want to live and then weigh up what to do with your home later once you’re settled.
- If you have an existing agreement for a family member or other person (a third party) to ‘top up’ the cost of your care, you could choose to use the Deferred Payments Scheme to cover the cost of the ‘top up’ payments with your scheme loan, subject to us agreeing there is enough equity or value in your home.
- Using the Deferred Payment scheme will free you up from relying on the other person for the ‘top up’ payments, who would otherwise be bound by government rules to cover them.
You should take independent financial and legal advice to help you decide which course of action is best for you.
Apply for Deferred Payment Scheme
To apply you must:
- Have capital (savings, stocks, shares, investments or other assets but excluding property) of less than £23,250
- Be assessed by a health or social care professional as needing permanent residential or nursing care in a registered care home
- Own or have part legal ownership of a property, which is not benefitting from a property disregard, which is registered with the Land Registry (if the property is not, you must arrange for it to be registered at your own expense)
- Have the mental capacity to agree to a Deferred Payment Agreement or have a legally appointed agent willing to agree this
Please talk to your Social Worker if you would like to join the scheme. A Deferred Payment Scheme application form will then need to be completed together with an Adult Social Care Services Financial Assessment form and returned to us by email
While in the agreement, you will also need to:
- Have a responsible person willing and able to make sure that you pay for any necessary maintenance to your property to keep its value
- Insure your property at your expense
- Pay your contribution in a timely and regular manner. If you fail to pay your contribution on a regular basis the council reserves the right to add this debt to the loan amount
Acceptance of any application under the scheme is subject to you meeting the criteria for joining the scheme, and Kingston Council being able to obtain security in your property.
Other ways to pay
Equity Release Schemes
There are various equity release products which may be suitable for your personal circumstances. Equity release products let you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, with some schemes, several smaller amounts.
You may also choose to pay the full cost of your care from your available income and savings/assets, or a family member may choose to pay some or all of this for you