Deferred Payment Agreements
What is a deferred payment agreement?
A deferred payment agreement is an arrangement with the council that will enable some people to use the value of their homes to pay for their care costs.
A deferred payment agreement can help you if you have been assessed as having to pay the full cost of your residential care, but cannot afford to pay the full weekly charge because most of your capital is tied up in your home.
The scheme offers you a loan from the council, giving you flexibility about paying your care costs. It doesn’t work in the same way as a conventional loan as the council does not give you a fixed sum of money, but pays an agreed part of your weekly care and support bill for as long as is necessary. The loan will have interest charged on it in the same way as money borrowed from a bank. The interest rate is fixed by the government.
You will pay a weekly contribution towards your care from your income or other savings. The part the council pays 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. You can also pay the debt back from another source if you want to.
Who can apply for a deferred payment?
You may be eligible for a deferred payment agreement if:
- You have been assessed by the council as needing permanent care in a residential care or nursing home.
- You own, or part own, your property.
- You have less than £23,250 in assets or savings (not including the value of your home).
Considering your options
A deferred payment agreement is only one way to pay for care, and will suit some people's circumstances better than others.
- You may choose to rent out your property, which could give you enough income to cover the full cost of your care. This way, you will not accrue a debt or be liable for interest and administrative charges.
- You may choose to pay the full cost of your care from your available income, savings or assets.
- There are also various equity release products which may be more suitable for you.
You should always take independent financial and legal advice to help you decide which course of action will be financially better for you and consider the effect on any benefits you receive.
Applying for a deferred payment agreement
If you wish to apply for the scheme, contact:
The Community Care Business Unit (Residential and Nursing Charging Team)
Tel: 0121 569 5959/5977
We will arrange for someone to send you an application form and go through the application process with you.