Loans to pay for care homes
Homeowners can apply for a loan to help pay their nursing home or care home costs.
Deferred payment scheme
Our deferred payment scheme is a type of loan that can help homeowners to pay for care home costs.
The scheme is for people who cannot afford to pay for care because all of their money is tied up in their house.
How it works
We don’t give you a fixed sum of money like a normal loan. Instead, we pay an agreed amount every week towards the cost of your care, on the condition that you’ll repay us when you sell your home. This might be when you choose to sell your home or after you’ve died.
You can also repay us from another source if you want to.
We charge interest on your loan and secure it against the value of your home. The maximum interest rate is fixed by the government. This charge is based on the cost of government borrowing and will change on 1 January and 1 July every year.
Before securing any loan against your home, you may want to get financial advice.
Renting out your home
Some people choose to rent the property out to generate income. If you do this, you will be expected to use the rental income to increase the amount you pay for your care each week. This will mean that the weekly payments made by us are less but you reduce your overall debt.
Who can apply
You’ll qualify for this scheme, if you:
- have had a care needs assessment that shows you need to be in a care home permanently
- have less than £23,250 in savings and investments (this doesn’t include the value of your property)
- own or have part ownership of a property that isn’t benefitting from a property disregard
- register your property with the Land Registry at your own expense
- be able to make your own financial decisions or have a legally appointed agent willing to agree to this
- be able to insure your property at your own expense
- keep the property in good condition to retain its value
Costs
We charge fees for setting up the agreement and an annual administration charge. This is to cover the Council's costs, and not to make a profit.
You’ll also need to pay a Land Registry charge fee.
Before the agreement is made, we’ll need to get a formal valuation of your property. There is a one-off charge for this which we add to the total cost of your loan.
Terms of agreement
Applications are accepted under this scheme subject to you meeting the above criteria and the local authority being able to obtain:
- a first legal charge on your property and
- the valuation of your property confirms there is enough equity to cover any outstanding debt that would be accrued
You can get more information about the terms of agreement for deferred payments on GOV.UK (chapter 9).
If you're not sure what to do about the cost of your care, you can speak to a professional for advice.
If you're worried or confused about the best way to pay for your care, you may want to talk to a financial professional.
The Council are not licensed to offer independent financial advice. Instead, we recommend asking for independent financial advice from a professional.
Independent financial advice is available free of charge from the following organisations:
You can speak to professional financial advisers for more formal advice. They are called independent financial advisers (IFA).
The Society of Later Life Advisers help people to find trusted financial advisers.
We cannot recommend specific IFAs or provide a list of them, but you can search online for them yourself.
If you don't have family or friends to help you, we may be able to provide you with a free independent advocate.
How to apply
You can contact our financial assessment team, to find out more or to get an application form.
Phone
020 8770 5280 (24 hour answerphone)