Paying for care

Many people worry they'll need to sell their home to be able to pay their care home costs.

For example, your financial assessment (see Will I have to pay for my care?) might have worked out you need to pay for your care home costs. But to pay that cost, you'd have to sell your home because that's where your capital is.

Read Age UK's guide on Do I have to sell my home to pay for care.

How a Deferred Payment Agreement (DPA) could prevent you from selling your house

A Deferred Payment Agreement (DPA) allows you to use the value of your home to pay for your care home costs. During the first 12 weeks you are in a care home, we'll ignore your home in your financial assessment. This gives you time to think how you will pay for your care and whether you might sell your home.

If you are eligible for the scheme, you'll enter into a legal agreement with us after the 12 weeks.

A DPA is only one way to pay for the costs and it will not suit everyone's circumstances. We advise you speak to a financial adviser or an independent organisation first. They can help you understand what other options are available.

There's information about financial advisors on Money Advice Service's website.

Eligibility

You should be eligible for a DPA if you:

• Are receiving or about to receive long-term care in a care home or supported living accommodation, including housing with care
• Own your home (unless your partner or certain others are living there)
• Ensure your home is registered with the Land Registry. If it isn't, you'll need to register it during the application process.
• Have savings and investments of less than £23,250, excluding the value of your home or your pension pot
• Have mental capacity to agree to a DPA. If not, you'll need to have a legally appointed representative who agrees to it. Read our guide on making decisions for someone else.

We might exclude your home's value when assessing your finances if certain people still live in your home. Read Age UK's guide on Do I have to sell my home to pay for care to see who these people must be. If this is the case, you wouldn't need a DPA.

If you're already living in a care home, you can still apply for a DPA.

How it works

The care home cost you can't afford (because it's tied up in your home), we'll pay on your behalf. This is the deferred payment.  You'll need to repay us at a later date. We put what's called a 'legal charge' onto your property so we can ensure we will get our money back.

A DPA is effectively a loan, but you don't get a lump sum of money from us. We'll pay the cost on your behalf, directly to the care home.

You'll get an agreement from us which will tell you:

• The maximum amount of money we will pay on your behalf
• The interest rates and administrative fees
• What our responsibilities are and what are yours. For example, you'll need to make sure you insure your home and keep it maintained.

You can end the agreement at any time. For example, if you sell your home, you can then repay us back in full. We cannot cancel the agreement without your consent.

A DPA usually begins 12 weeks after you've been in the care home.

How much you can defer

How much you can defer depends on the value of your house. That value determines your 'equity limit'.  We don't allow you to use all your property's equity. This is so you still have money left over to pay sale costs of your property (solicitor's fees etc). And it protects us if there's a drop in house prices.

We'll ask you to arrange estate agent valuations of your property, which are usually free. If you are unable to arrange valuations yourself, we can this for you for a fee.

How do I repay what I owe

The deferred payment will build up as a debt that you'll need to repay. The agreement ends automatically following your death.

For most people, they'll pay us back from the money they get from selling their home either now or later on. Some people choose to keep their house until their death, so we will be repaid from your estate. Your executor will usually need to do this within 90 days.

Or, you might rent your home out and use this money to repay us. If you do rent out your home, you should use the income to reduce the amount you are asking us to defer. This will minimise your overall deferred payment debt.

You can also pay the debt back from another source if you want to. For example, a family member or friend might pay.

If the money you owe is repaid without selling your home, the executor can follow any instructions you've left on what to do with it.

Setting up a deferred payment agreement on someone's behalf

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

The person applying for the DPA must have capacity to understand what they are entering into. If they don't, then another person may need to represent them. Only a person who is legally authorised can represent someone in applying for a DPA. Read our page on making decisions for someone else.

Interest rate and administration fees

We do not make a profit out of DPAs. We need to make sure that we can invest in the scheme so people can keeping benefiting from it.

We charge interest on the amount owed to us, and an administrative fee to cover our costs.

The interest rate is set nationally and reviewed every six months.

You'll receive a statement every six months detailing the costs. It'll include what your deferred payment debt is to date.