Deferred Payment Agreements: Paying for Care Without Selling Up Now
The scheme most families have never been told about
A deferred payment agreement lets someone entering a care home delay paying their care costs: the council pays, secured against the home, and is repaid when the property is sold or from the estate after death. It exists for people whose money is mostly in their home, with other savings below £23,250, and it means a house never has to be sold in a hurry to fund care.
We include it in our funding guides for one reason: families weighing a care home against care at home should know every option before deciding, and this one is routinely missed. It also has costs and conditions worth understanding, and it is worth remembering that care at home avoids the question entirely, because the home you live in is not counted in the means test for home care at all.
Deferred Payments at a Glance
The essentials:
- For people whose council agrees they need a care home, who own their home, and whose other savings are below £23,250
- The council pays the care home and takes security against the property
- Repayment comes when the property is sold, or within 90 days after death
- Councils can charge interest, reviewed every six months, plus reasonable set-up costs such as valuation and legal fees
- You can usually defer up to 70 to 80 per cent of the home’s value before the council reviews the arrangement
- Short-term care home stays are not covered
Figures on this page were checked on 13 August 2026 against MoneyHelper’s deferred payment guidance. Rates can change, usually each April, and MoneyHelper always has the most up to date figures.
How It Works
Who qualifies?
Three things need to be true: the council agrees a care home is needed, you own your home or another asset the council can use as security, and your other savings and capital are below £23,250. The scheme is not automatic: you apply to the council, and the agreement sets out the terms.
What it costs
This is a loan in all but name. Councils in England can charge interest, reviewed every six months, and reasonable administrative charges to cover valuation, legal work and Land Registry costs. The debt grows over time, which is exactly why the decision deserves proper advice, not a rushed signature.
What it protects is timing. Nobody is forced into a quick house sale at a difficult moment, the property can be sold when the family is ready, and in the meantime it may even be let out. What it does not do is make care cheaper: the full cost is still paid, later, with interest and fees on top.
Get independent financial advice before signing one. The council must set reasonable terms, but reasonable terms on a growing debt still deserve scrutiny, and alternatives sometimes suit a family better.
In Hertfordshire, deferred payments are arranged through Adult Care Services as part of the financial assessment, and HertsHelp on 0300 123 4044 offers free, independent advice.
A deferred payment only becomes relevant because a care home brings the house into the means test. Care at home does not. For care in your own home, the home you live in is excluded from the financial assessment entirely: there is nothing to defer, because the house was never on the table.
For many families comparing the two, that changes the arithmetic. Our guides to the care means test and home care or a care home set the comparison out honestly, including where a care home is genuinely the right answer.
Ask the council: the interest rate now and how it is reviewed, every set-up cost, the equity limit on the property, what happens if the property is let, and exactly what triggers repayment. Ask an independent adviser whether the numbers make sense against the alternatives, including care at home and, where needs are primarily health needs, NHS continuing healthcare, which is free and has no means test at all.
Common Questions About Deferred Payments
What is a deferred payment agreement?
An arrangement where the council pays care home costs, secured against your home, and is repaid when the property is sold or from the estate within 90 days after death. It stops a forced house sale, but the full cost is still paid, with interest.
Who qualifies for a deferred payment agreement?
Someone the council agrees needs a care home, who owns their home or another asset the council can secure against, and whose other savings are below £23,250. Short-term stays are not covered.
Does a deferred payment agreement cost anything?
Yes. Councils in England can charge interest, reviewed every six months, plus reasonable set-up costs such as valuation, legal and Land Registry fees. The debt grows over time, so take independent advice before signing.
Is there a limit on how much can be deferred?
You can usually defer up to 70 to 80 per cent of the home’s value before the council reviews the arrangement, so equity is not unlimited.
Does care at home need a deferred payment?
No. For care in your own home, the home you live in is excluded from the means test entirely, so there is nothing to defer. This is one of the quiet financial differences between the two options.
Where do we arrange one in Hertfordshire?
Through Adult Care Services as part of the financial assessment, on 0300 123 4042. HertsHelp on 0300 123 4044 offers free independent advice first.
How to Get Started
- Before any care home decision, get the means test facts straight, including how care at home is treated differently
- If a care home is right, ask Adult Care Services about a deferred payment agreement and take independent advice on the terms
- If staying at home is worth exploring first, talk to us about what that would look like. Call 01727 324 127