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A loan from us to help you pay for your care home.

A deferred payment is an arrangement with us to use the value of your home to pay towards your residential care home fees.

The loan is not paid as a lump sum, but as contributions towards your care home fees. These contributions are the difference between what you pay and the care home fee. 

If we accept your application for a DPA, we will place a legal charge on the property to safeguard the loan. You need to maintain and insure the property. To help with the costs of this, you can keep up to £144 a week from your income.

Consider taking independent financial and legal advice before entering into a DPA as there may be other ways of paying for care that are better for you. 

Benefits of a DPA

Entering into a DPA allows you to claim Attendance Allowance or, if you are under 65, the care component of Disability Living Allowance or Personal Independence Payment while you are in residential care.

You may rent out your home and use part of the rental income to pay your care home fee. The advantages of renting out your home are;

  • the DPA debt will be less than otherwise
  • your property is occupied
  • your tenant pays utilities and council tax
  • we will only take account of 80% of your rental income in the financial assessment, this leaves you with 20% to use as you wish

You might want to pay more than our limit of £490 a week for a care home (for example, for a better room in the home). If there is enough equity in your home you might be able to add this cost to the loan. 

Who is eligible?

To apply for a DPA you must;

  • have capital and savings (excluding the property) amounting to less than £23,250
  • be entering permanent residential/nursing care in a registered care home
  • ensure your property is registered with the Land Registry
  • ensure that the property is maintained (at your expense) so as to retain its value 
  • insure your property at your expense
  • be the sole owner of the property or, if the property is held in joint or multiple names, the other owner(s) must agree to the application
  • have mental capacity to agree to a DPA or have a legally appointed agent willing and able to agree this
  • pay your contribution regularly and on time

Also;

  • the property must have been your main residence before going into residential/nursing care
  • there can be no other 'beneficial interests' in the property, for example outstanding mortgages or equity release schemes, unless this is approved by us

Costs and repayment

We will charge an administration fee of £804 when you apply for a DPA. This is to cover our legal costs and Land Search and Registry charges. There is also an annual administration charge of £100. You can ask us for a full list of charges.

The interest rate is set by the Department of Health and may change on 1 January and 1 July each year.

We will send you a statement twice a year, showing how your charge is calculated and the outstanding loan amount.

You can end the agreement at any time, for example you might decide to sell your property. In this case, you will need to pay back the loan immediately. Otherwise, the DPA will remain in place for the rest of your life. In this case, the executor of your estate should arrange repayment of the loan. This could be by selling your home, or by arranging for someone else, such as your heir, to pay. This will usually need to be done within 90 days. If, after 90 days, the executor has not taken reasonable steps to repay the loan, then we have the power to recover the amount owed through the courts.

Do I have to sell my home?

A DPA means that you don't have to sell your home in your lifetime if you don't want to. We can't cancel the agreement without your consent and your home will still belong to you. This means that you could, for example, leave it to your children in your will. However, the loan will still need to be paid back. You are not allowed to give away your home to avoid repaying the loan. If we believe that your home or your money have been given away deliberately to avoid paying care charges, then we can take action to recover any money that we are owed.

Other information

Your carer or family can help you make a decision, but only you can make the application for a DPA. If we are concerned that you do not have the capacity to understand, then someone else might need to represent you.  We have more information about mental capacity.

If you would like more information about DPAs and would like your application to be considered, please speak to your financial assessments officer who will undertake your financial assessment.

Page last updated: 17/01/2018 09:01
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