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Deferred payments for care home costs

What is a deferred payment?

A deferred payment agreement is an arrangement with the council that lets people use the value of their homes to help pay care home costs.

The amount that is not covered by your income and savings will be repaid to us when you decide to sell your home, or it can be paid back after your death.

You should get independent financial advice to help you decide how to pay long-term care costs and make sure you are claiming all the benefits and allowances you can.

Am I eligible to use a deferred payment agreement?

As a general guide, the council must agree that your care needs should be met via a care home placement.

You should be able to get a deferred payment agreement if:

  • you live in a care home or are moving into one soon
  • you own your own home
  • you have savings and investments of less than £23,250, not including your home or pension
  • you have sufficient equity in your home

The council will provide you with more details if you decide to use the deferred payment scheme to help pay your care costs.

How to apply for a deferred payment

It takes around 12 weeks to set up a deferred payment agreement.

The agreement will include the maximum amount that the council will pay towards your care, along with the interest rate and any fees charged. It will also include certain conditions, such as how the property should be maintained.

Download the deferred payment application form (Word doc) [119KB]

Deferred payments policy (PDF) [891KB]

Apply if your partner lives in your home

If you need care in a care home but your partner lives in your home, then the council will look at their circumstances as well. They may not include the value of your home when they look at your finances to work out how much you will have to pay towards the costs of your care.

If your partner has circumstances that mean the value of your home is included, you can still get a deferred payment agreement if your partner also signs the agreement.

The amount you can defer

The amount you can defer depends on how much your home is worth, and is based on a property valuation. You can also get an independent valuation if you want to.

Most people use around 70 percent of the value of their home. The council does not use the full value to make sure you have enough money left over to pay the costs of selling your house (like solicitor's fees) and to make sure they have enough money to pay for your care if house prices go down.

The cost of setting up a deferred payment agreement

The deferred payment agreement setup charge is £625, which includes the cost of having your property valued. To cover our costs, the council charges interest on the amount you owe us until the money is repaid.

The interest rate is set by the government and reviewed every six months. 

When to repay a deferred payment agreement

You can repay a deferred payment at any time, either by selling your house or if someone else (like a friend or relative) pays the charges. 

Or you can have a deferred payment agreement for the full length of your stay in a care home, and it will be paid back from the sale of your home after your death.

The deferred payment agreement is a legally binding agreement that ends automatically after your death. At that point, the executor of your estate will have 90 days to arrange to pay back the money owed.

Applying for someone who cannot understand

Carers and families can help people make decisions about their care and how to pay for it.

If the council thinks the person applying for the deferred payment agreement does not understand the agreement, or will not be able to understand it in the near future (such as someone with dementia), then another person may need to represent them. Only a person who is properly authorised, like someone with legal power of attorney, can represent someone in applying for a deferred payment agreement.

What are the disadvantages of using a deferred payment agreement?

  • You'll still have to pay for the upkeep and maintenance of your home.
  • You might have to carry on paying for heating and lighting bills so the house doesn't look unoccupied.
  • You'll have to keep your home insured, which might be a problem if it's empty.
  • If you still have a mortgage on the property, you'll have to carry on paying it.
  • House prices could fall, leaving you with less money to pay back the fees.
  • If you already have an existing equity release scheme, you might not be able to join a deferred payment scheme.

You might also want to compare using a deferred payment agreement with the alternative of, for example, selling your home and putting the proceeds into a savings account.

Don't forget, you should get independent financial advice from a solicitor, financial advisor, or an independent organisation before signing a deferred payment agreement.

 


 

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