Paying for residential care

Deferred payment agreements

A Deferred Payment Agreement (DPA) is an option that may help you pay for long term residential or nursing care without having to sell your home immediately.

If most of your money is tied up in your property, a DPA lets us pay some of your care costs for you. The amount you owe is then repaid later, usually when your home is sold.

How it works

The scheme offers you a loan using your home as security. It is not like a conventional loan where you get a fixed sum of money. Instead, we will pay an agreed amount of your care costs every week, on the condition that you repay us later when you sell your home. This could be when you choose to sell it in your lifetime or after you have died. You can also repay us from another source if you want to.

• you will pay a weekly contribution towards your care that you have been assessed as being able to pay from your income and other savings. 
• we will pay the part of your weekly care costs that you can’t afford whilst your home is your main asset. This is called your ‘Deferred Payment’.
• you repay the amount later, usually from the sale of your home or your estate.

Types of Deferred Payment Agreement

There are two types of Deferred Payment Arrangement:

• a traditional Deferred Payment Agreement is where we arrange your care and pay the care home directly. You then make a weekly contribution based on what you can afford, and the rest of the cost is deferred and repaid later. With this option, you may qualify for a 12 week property disregard and a Disposable Income Allowance to help with essential home costs.
• a loan type Deferred Payment Agreement is different because you arrange and pay the care provider yourself. We will loan you the money in instalments to cover the fees. Usually at the care home’s self funding rate. There is no 12 week disregard or Disposable Income Allowance, and you are responsible for maintaining and insuring your home.

With both types, the deferred amount becomes a debt that is repaid later. Often when your property is sold or from your estate.

If you choose a Loan-type Deferred Payment Agreement (DPA)

If you select a Loan-type DPA, the loan can only start once a legal charge is secured against your property. This legal process usually takes several weeks to complete.
During this time, you will need to pay for your care using your own money, such as your savings or income. Once the legal work is finished and the charge is in place, the loan will begin covering your care costs.

Qualifying for a Deferred Payment Agreement (DPA)

Generally, anyone who lives in Lincolnshire and owns their own property can apply for a DPA to cover the cost of care. These assessments take time to arrange and complete. Therefore, it is recommended that as your savings reach £30,000 you may wish to contact us to ask for a referral. 

The following must also apply:

• your total savings and assets (excluding your main home's value) must be under £23,250.
• your home must not be disregarded in your financial assessment (e.g., it is not occupied by a spouse or dependent relative).
• you must agree to have the local authority place a legal charge (a form of security) on your property. And all owners must sign the required documentation.
• there must be no other significant financial interest on the property (like an outstanding mortgage, loan, or equity release scheme). Unless the local authority and the person with beneficial interest specifically approves it beforehand.
• you must meet Lincolnshire County Council’s needs criteria for support with care.

If your property has been disregarded from your financial assessment. You will not be eligible for a deferred payment.

12 Week Property Disregard

A 12 week property disregard is only available with the Traditional Deferred Payment Agreement. We will check if you are eligible for this through a financial assessment.

If you are eligible the value of your main or only home will be left out of your financial assessment for up to 12 weeks. This period normally begins when you move into permanent residential or nursing care. The purpose of the 12 week disregard is to give you time and space to consider how you wish to pay your care home fees and make informed decisions about your longer term arrangements.

The costs and charges involved

The Care Act 2014 allows us to charge interest for the duration of the deferred payment agreement. This rate will be set each year and changes on the 01 January and 01 July each year. This applies to both types of deferred payment agreement.  

We will also charge an administration fee to cover costs but will not make a profit from the arrangement. 

Alternative options

You do not have to enter a Deferred Payment Agreement. You can choose to pay your care costs using your income, savings or other assets, and in some cases a family member may contribute instead.

You might also decide to rent out your property, which could provide enough income to cover your care fees. This option may help you avoid taking on a deferred payment, interest charges or administrative fees, and it ensures your home remains occupied.
Other financial products may also be available depending on your circumstances.

Before choosing the best option for you, it is important to seek independent financial and legal advice.

If you lack capacity and require a financial deputy or attorney

If you are unable to manage your own financial affairs, a registered attorney or financial deputy can enter into a Deferred Payment Agreement on your behalf. If you already have a Lasting Power of Attorney (LPA) for finance or a registered Enduring Power of Attorney (EPA), your attorney can sign the agreement. For a loan type agreement, this legal authority must be in place before it can begin.

If you have lost capacity and no one is legally authorised to act for you, a relative, friend or solicitor will usually need to apply to the Court of Protection to become your financial deputy. While this application is in progress, we cannot start a loantype agreement. But it may fund your care under the traditional arrangement. Any costs paid during this period must be repaid once the deputyship or LPA is granted. 

If we believe a deputy or attorney is not acting in your best interests, we will refer the matter to our safeguarding team. Which may lead to an investigation by the Office of the Public Guardian and possible removal of your deputy's authority to act on your behalf.

Ending the agreement

The Deferred Payment Agreement ends when the full amount owed is repaid, either during your lifetime or from your estate after you die. If the agreement ends because of a person’s death, the outstanding balance becomes payable 90 days later. Interest will continue to be added until the debt is fully cleared.

You can sell your home to anyone you like, even a family member, but it must be sold for the market value.

A deferred payment comes to an end :

• if you repay the full amount due
• if you sell your property and we are repaid from the proceeds of the sale
• on your death and the amount is paid back from your estate

How to apply

In order to apply to enter deferred payment agreement, you must: 

• meet the eligibility criteria as set out above 
• if the property is not registered at HM Land Registry, you must arrange for it to be registered at your own expense. Alternatively, our Legal Services team will complete the registration to enable the charge to be applied to your property and will charge you for this 
• have mental capacity to agree to a deferred payment agreement or have a person with legal authority to act for you and who is willing to agree to enter into the deferred payment agreement, e.g. an attorney or a financial deputy 
• complete an application form 

You should take independent financial and legal advice before applying. If you decide to enter a deferred payment agreement, please contact us by phoning 01522 782155. Or by emailing Fin_Payments@lincolnshire.gov.uk