Deferred Payment Agreements: Using Your Home to Pay for Care (2026)

If someone needs to move into a care home and most of their money is tied up in their house, a Deferred Payment Agreement (DPA) can buy time. It lets the council pay the fees now, on the understanding that the debt is repaid later — usually when the property is eventually sold.

What is a Deferred Payment Agreement?

A DPA is an arrangement with your local council. Instead of selling a home quickly to fund a care home place, the council pays (or contributes to) the fees, and a debt builds up against the property. That debt is secured by a legal charge — similar to a mortgage — and is repaid later, usually from the proceeds of the eventual sale.

It's designed for one specific problem: someone has enough wealth on paper, tied up in bricks and mortar, but not enough cash to pay care fees straight away. A DPA stops that mismatch forcing a rushed house sale.

How does a DPA work, step by step?

1. Care needs assessment. The council (or NHS, if NHS Continuing Healthcare might apply) confirms the person needs a care home place. You can request this via GOV.UK — apply for a care needs assessment.
2. Financial assessment (means test). The council works out what the person can afford, based on income, savings and property.
3. DPA agreed. If eligible, the council agrees to defer some or all of the fees, and registers a legal charge against the property.
4. Fees are paid. The council pays the care home (or the person pays and is later reimbursed, depending on local arrangements), while the debt accumulates.
5. Interest and admin fees apply. Most councils charge interest on the deferred amount, plus a setup fee and sometimes ongoing administration charges.
6. Debt is repaid. Usually when the home is sold, or when the person dies and the estate is settled. You can also repay early, in part or in full, at any time.

Am I eligible for a DPA?

In England, under the Care Act 2014, your council must offer you a DPA if you meet all of these:

• You have needs that are best met in a care home, and are moving into one.
• Your non-housing savings and assets are below the upper capital limit — this is the same £23,250 threshold used in the wider means test. Always check the current figure, as thresholds are reviewed.
• You own a property that isn't already disregarded from the means test (for example, because a spouse or dependent relative still lives there).
• There's enough equity in the home to make the loan safe for the council to offer — usually the council won't let the debt run higher than the property's value.

If you don't meet every criterion, your council can still choose to offer a DPA at its discretion — it's worth asking, even if you think you might not qualify.

What does a DPA cost?

A DPA is not free money — it's a loan against the home, and it comes with charges:

• Interest. Most councils charge interest on the deferred amount, calculated on a compound basis, so the debt grows faster the longer it runs. Rates are reviewed periodically — ask your council for the current rate before you agree anything.
• Setup and administration fees. Councils can charge a one-off fee to arrange the DPA, and sometimes ongoing fees to manage it.
• Legal charge registration. The council registers a charge on the property, similar to a mortgage, which is removed once the debt is repaid.

Ask your council for a full written breakdown of interest rate, fees and how the debt will be calculated before you sign anything. This detail varies between councils.

DPA vs other ways to pay for care

Can I rent out my home while I have a DPA?

Often, yes. Many families let the property and use the rent to help pay ongoing care costs, which slows down how quickly the deferred debt grows. Rules on this vary by council, and rental income may affect the financial assessment, so check with your council before making arrangements. If the property needs letting agents, insurance or repairs, factor those costs in too.

How and when do I repay a DPA?

The debt is usually settled when the property is sold — either because the family chooses to sell, or after the person has died and the estate is being wound up. You're not forced to sell immediately in either case; most councils allow a reasonable period to arrange a sale.

You can also repay some or all of the debt earlier — from savings, an inheritance, or by remortgaging — if that suits you better. There's usually no penalty for early repayment, but check your agreement.

Is a DPA right for you?

A DPA suits some situations well and not others. It can be worth considering if:

• You don't want to sell the home in a hurry, particularly if the property market is weak.
• You'd rather rent the property out than sell it.
• You want time to make a considered decision rather than a forced one.
• You want to keep the option of the person returning home if their needs change.

Be cautious if:

• The interest and fees would eat up a large share of the eventual sale proceeds.
• You're not sure the home has enough equity to cover a long stay in care.
• You haven't compared it with other options, such as equity release or using other assets first.

How do I apply for a DPA?

• Contact the adult social care team at the local council where the person lives, and ask specifically about a Deferred Payment Agreement.
• Complete the financial assessment so the council can confirm eligibility.
• Ask for the interest rate, setup fee and any ongoing charges in writing before agreeing.
• Check who holds Lasting Power of Attorney for property and financial affairs, since someone will need authority to sign the agreement and later handle the sale — see GOV.UK — Lasting power of attorney.
• Consider speaking to a SOLLA-accredited financial adviser or an adviser via MoneyHelper before signing, especially if there's a mortgage, equity release plan or complex family situation involved.

This article is general information, not financial advice. Every council's terms differ, and your personal circumstances matter — get independent advice before agreeing to a DPA.