Deferred payment agreements: using your home for care

By CareFinder Team · Published 2026-06-30 · Last reviewed 2026-09-18

A deferred payment agreement lets someone use the value of their home to pay care home fees without selling it during their lifetime. In England, the council pays or lends the fees and secures the debt with a legal charge on the home. The amount deferred, plus interest and charges, is repaid when the home is sold or from the estate, normally within 90 days of death.

A deferred payment agreement (DPA) lets someone use the value of their home to pay for a care home without having to sell it during their lifetime. In England, the council pays the care home fees, or lends the money, and takes a legal charge on the home as security. The debt, plus interest and charges, is repaid later, usually when the home is sold or from the person's estate after death.

It is designed for people whose money is mostly tied up in their home. This article explains how DPAs work in England, based on the Care and Support Statutory Guidance.

Who qualifies for a deferred payment agreement?

In England, the council must offer a DPA to someone who meets all of these conditions when they apply:

• They normally live in the council's area
• They have been assessed as needing care in a care home, or would be if assessed
• Their savings and other assets, not counting their home, are at or below the upper capital limit, which for 2026/27 is £23,250
• Their home is not disregarded in the financial assessment, for example because a partner still lives there

The council must also be able to secure the debt, normally with a first legal charge on the property registered with the Land Registry. Councils can offer DPAs more widely at their discretion, for example to someone just above the savings limit or to fund care in supported living.

How does a DPA work in practice?

There are two forms:

• Traditional: the council pays the care home and adds the amount to the deferred debt.
• Loan type: the person pays the care home and the council lends them the money in instalments.

The person usually still contributes from their income. They can keep a disposable income allowance, which the guidance sets at up to £144 a week, to cover personal costs and looking after the home. They can choose to keep less, which reduces the amount deferred.

The council must send a statement every six months, and whenever asked, showing how much is owed.

How much does a DPA cost?

Interest

Councils can charge interest, but not more than a national maximum. The guidance says the maximum changes every six months, on 1 January and 1 July, and tracks a government borrowing rate plus 0.15%. Councils can charge less, but must charge all their DPAs the same rate. Interest is compounded, so it is charged on interest already added.

Administration charges

Councils can also charge set-up and running costs, such as legal fees, Land Registry fees and property valuations. These can be paid up front or added to the debt.

Ask the council for a written illustration of the total cost over several years before signing.

How much can be deferred?

The amount is capped by an equity limit, which leaves a cushion in the property. Where the home is the security, the limit is the property's value minus 10%, minus the lower capital limit, minus any mortgage or other debt secured on it.

Once the limit is reached, the council stops deferring further fees, although interest can still be added. By then the person's remaining assets are usually low enough to qualify for council support. If the family has agreed to pay a top-up for a more expensive home, ask what happens to it at that point, because the council may not continue to fund it.

What are the person's responsibilities?

The agreement will usually require the person to:

• Keep the home insured, including if it is empty
• Maintain the property
• Ask the council's consent before anyone moves in
• Tell the council about changes in their finances or care needs

Some people rent out the home during the agreement. Rental income can reduce the amount deferred, but it is taxable and counts as income in the financial assessment, so take advice first.

How and when is the debt repaid?

A DPA ends when:

• The home is sold. The debt is repaid from the proceeds.
• The debt is repaid from another source, such as savings or a relative.
• The person dies. The debt falls due 90 days after death. Interest continues to build until it is paid in full. If the estate is not taking active steps to repay, the council can start legal proceedings.

Whatever is left after the debt is paid passes to the person's beneficiaries.

When is a DPA a good idea?

A DPA can suit people who:

• Want to keep the home, for example so family can decide about it later
• Want time to sell without pressure
• Want to rent the home out and use the income towards fees

It may be less suitable if the home will be sold soon anyway, since interest and charges add to the cost. Other options include selling the home, renting it out, or using other family resources. The NHS guide to paying for your own care describes these alternatives.

Timing: the 12-week property disregard

When someone moves permanently into a care home, the home is ignored for the first 12 weeks. Councils should aim to have a DPA in place by the end of this period, so there is no gap. Contact the council as early as possible.

What about Scotland, Wales and Northern Ireland?

Wales has its own deferred payment scheme under Welsh legislation. In Scotland, councils can agree deferred payment arrangements for care home fees. In Northern Ireland, ask the Health and Social Care Trust how it handles property in the financial assessment. Rules and costs differ, so check locally.

This article is general information. A DPA is a legal agreement secured on a home, so read it carefully and consider advice from a solicitor or a specialist care fees adviser before signing.

Frequently asked questions

Can the council refuse a deferred payment agreement?

It must offer one if the person meets the criteria and can provide adequate security. It can refuse if, for example, it cannot secure a first legal charge on the property or the person does not agree to reasonable terms such as insuring the home.

Does interest start straight away?

Interest can be charged from the start of the agreement and is compounded. Councils can charge less than the national maximum but not more.

Can I still leave my home to my children?

Yes. The home remains the person's property. The debt must be repaid first, usually from the sale, and whatever remains goes to the beneficiaries under the will.

What happens if the house value falls?

The council revalues the property during the agreement and may adjust the equity limit. If the limit is reached, it stops deferring further fees.

Can someone else pay off the DPA?

Yes. A relative or other third party can repay the debt at any time. The council must then remove its charge on the property.

Key takeaways

• A DPA lets people use their home's value for care home fees without selling it in their lifetime.
• In England, councils must offer one to people who meet the criteria and can provide security.
• Interest is capped nationally, reset every six months, and compounds.
• An equity limit caps the amount deferred and leaves a cushion in the property.
• The debt falls due 90 days after death and interest continues until it is repaid.