The Deferred Payment Agreement (DPA)

The Deferred Payment Agreement means we would loan you the difference between what you can afford to pay towards your care and the actual cost of your care. This loan builds up as a debt, which you would pay back to us when your property or asset is sold. You can also pay the debt back from another source if you want to.

The Deferred Payment Agreement sets out both your responsibilities and ours.

One of your responsibilities is to make sure that your property is insured and maintained. The cost of maintaining your property may be taken into account when we work out how much you are able to pay towards the cost of your care.

You can end the Deferred Payment Agreement at any time (for example if you sell your property) and the loan would be paid back to us immediately. If you were to pass away, the agreement would end, and the loan amount would be paid to us (if repaid within 90 days no further interest would be charged). The agreement would be frozen if the amount we had loaned to you reduced the remaining capital in your property to the amount of capital we would disregard as part of your financial assessment, currently £14,250 (the lower capital threshold).

Example:

• Your property is valued at £100,000. We would reduce this by 10% to cover sale costs
• We would deduct the lower capital threshold of £14,250
• (£100,000 less 10% = £90,000 - £14,250 = £75,750)
• We could loan you up to £75,750

We cannot cancel a Deferred Payment Agreement without your consent.

Advantages of a Deferred Payment Agreement

• You can choose when to sell your property or asset, you may choose not to sell your property/asset during your lifetime to pay for your care. 
• You do not have to meet the full cost of your care yourself straight away. Care charges can be deferred and paid either when your property is sold, or upon your death from your estate.
• If you are in residential care, you are entitled to keep a Personal Expense Allowance (currently £30.15 per week) which is set by the Department of Health each year.  With a Deferred Payment Agreement for residential care, you can request a higher personal allowance of up to £144 per week.
• If you choose to keep a higher personal allowance, this will increase the weekly amount we loan to you and this will also increase the amount of interest charged. When the Deferred Payment Agreement ends or is frozen, your personal allowance will return to the standard amount of £30.15 per week.

Disadvantages of a Deferred Payment Agreement

• If you choose not to sell your property you may not qualify for some means tested benefits that you would otherwise be entitled to, for example Pension Credit, Housing Benefit.
• You pay us the costs of setting up and administrating the Deferred Payment Agreement. 
• Interest is charged on the full amount we loan to you.
• You will need to ensure that your property is adequately insured and maintained during the period of the agreement. This includes gardens and outbuildings.

Deferred Payment Agreement costs

Interest on the loan amount

The loan will have interest charged on it in the same way as a bank loan. The maximum interest rate is fixed by the government and is based on the cost of government borrowing.  The interest rate will change on 1 January and 1 July every year. The current interest rate is 4.05%.

Interest will be applied to the outstanding loan amount on a daily basis.  The interest will apply from the day you enter into the Deferred Payment Agreement. You will receive loan statements on a 6 monthly basis advising you of how your loan is calculated and the outstanding balance on your deferred payment account.

Other costs

The following costs can be added to the amount deferred or you can choose to pay these separately up front.

Legal fees

* Anyone with un-registered title deeds will be required to apply for the voluntary registration of their title deeds prior to being granted a DPA.

Land Registry fees

Voluntary first registration - value of property

Valuation costs

Administration fees

**This relates to a standard charge for admin costs where a deferred payment application/agreement is terminated before its completion (whatever the reason).

Applying for a Deferred Payment

To apply for a Deferred Payment Agreement, you must:

• Have capital (excluding the property) of less than £23,250
• Undergo an assessment of your needs with your Care Co-ordinator that shows you require, and will be, entering permanent residential/nursing care in a registered care home, or moving into an Extra Care scheme.
• Own or part own a property or asset which is included in your financial assessment.
• If you own a property, it must be registered with the Land Registry.  You can ask us to register the property for you, but you will still be responsible for the registration costs.  

We must be able to register a charge on your property.  If we are unable to do so then we will be unable to enter into a Deferred Payment Agreement with you.

• Have the mental capacity to agree to a Deferred Payment Agreement or have a person with legal authority to act on your behalf ie, a Deputy appointed by the Court of Protection or someone with a relevant Enduring Power of Attorney or Lasting Power of Attorney. We can provide further information about how you would make these arrangements.

During the term of the Deferred Payment Agreement, you will also need to:

• Have a responsible person willing and able to ensure that necessary maintenance is carried out on your property.  Any maintenance costs must be paid for by you.
• Make sure your property is insured. Insurance costs must be paid for by you.

Once a Deferred Payment Agreement is in place, you must not enter into any other agreements related to your property, for example, re-mortgages or equity release agreements, unless the we approve this.

How to apply

If you wish to apply for a Deferred Payment, you will need to complete a Deferred Payment Application Form. The Financial Assessment and Benefits Officer carrying out the financial assessment will explain the agreement in more detail, answer any questions that you may have and send you an application form.

Before you are accepted for a Deferred Payment loan, you must meet our criteria outlined above.  We must be able to secure a loan on your property or asset before a Deferred Payment is agreed.

If a Deferred Payment Application is delayed

If you are in Residential Care and your Deferred Payment Application is delayed, you may need to keep the care home updated on the progress of your application as you may be unable to pay the full cost of your care until the agreement is in place.

Once the Deferred Payment Agreement is in place, we will pay the 4 weekly loan amounts to you from the agreement start date, so that you can pay any outstanding fees to the Care Home.

A delay in the Deferred Payment Agreement will not have an impact on you if you are receiving Non Residential Care services as you pay your contribution directly to us.

If a Deferred Payment Application is refused

If your application for a Deferred Payment Application is declined, we will contact you to inform you of the reasons for this decision.

If you are in Residential Care and you are informed that your application has been declined you will need to contact the care home to arrange to pay your care fees from another source.

If you are in Non Residential Care and you are informed that your application has been declined you will have to arrange to pay your care fees from another source.

Independent advice

We would recommend that you seek independent financial advice before entering into a Deferred Payment Agreement.

Further information

You can get more information on our Deferred Payment Agreement from our Deferred Payment Agreement Policy at How much you will have to pay for care and support services