Deferred payment agreements
If you’re unable to sell your home or you don’t want to sell it within your lifetime, ask your council about a deferred payment agreement. The council may agree to pay your care home fees and then reclaim the money when your property is sold or after your death. You may also be able to get a loan from them, so you can pay your care home fees directly to the care home yourself.
The council may offer you a deferred payment agreement if:
- they’ve assessed your needs and agree that you need to be in a care home
- not including your home, you have capital of less than £23,250
- your home is not disregarded.
The council can also choose to offer you a deferred payment agreement in certain circumstances - for example, if your capital is close to £23,250 and they think you’d benefit from an agreement.
The council can decide whether to agree to your request. In some circumstances, they may refuse. For example, if:
- your house’s value isn’t high enough
- they’d have difficulty recovering the debt in the future
- you don’t fully accept their terms.
There may be administration charges and you may have to pay interest on the loan. You’ll also have to insure and maintain your property. Your council must take into account the cost of maintaining your property when figuring out how much you must pay towards your care costs.
You may be able to ask for a short-term loan to pay your care home fees. This could be helpful if, for example, you're struggling to sell your property. Many people use a loan-style deferred payment agreement with the council to help in this situation. Your agreement is still with the council but, instead of the council paying the care home directly, you pay the care home and the council loans you the money in instalments, minus any contribution you make from other sources.
You may also be able get a short-term bridging loan from a private company. However, these loans can be expensive as you usually have to pay fees and a high rate of interest. It’s advisable to get financial advice about these loans first.
Another option may be an immediate need care fee payment plan (also called an Immediate Needs Annuity) or deferred care fee payment plan. These are basically insurance policies. In return for a lump-sum investment, the policy pays a regular income towards care costs for the rest of your life. You may be able to use the value of your home to secure a loan so you can buy an annuity.
You could also consider equity release. This is a way to release money from your home without having to sell it. For more information, read our page on equity release.
Renting out your home
You could rent out your home and use the income to pay your care home fees or to reduce the amount you borrow through a deferred payment agreement. However, this can be time-consuming and there are costs involved, so look into it carefully. Rental income is taxable and you’ll also have responsibilities as a landlord. Visit Gov.uk to find out more about renting out a property.
Check your benefits
If you’re selling your home or entering into any of the arrangements described, your entitlement to means-tested and other benefits may be affected. Contact our Helpline to arrange to speak to an adviser, or read our factsheet Care home fees and your property for more information.