Deferred Payment Agreement Calculator
Deferred Payment Agreements for Care Home Fees
A Deferred Payment Agreement lets you delay paying your care home or nursing home fees by borrowing against the value of your home, so you are not forced into a rushed sale. This guide explains how the scheme works, what it costs, how long it runs, and where the genuine drawbacks lie. Use the calculator above to model your own figures.
The basics
What is a deferred payment agreement?
A Deferred Payment Agreement, usually shortened to DPA, is an arrangement with your local council. Rather than selling your home to fund a care home place, the council pays part of your fees on your behalf and secures the money with a legal charge against your property. The debt, plus interest, is repaid when the property is eventually sold, either during your lifetime or from your estate.
It is a loan rather than a grant. Interest accrues from day one and continues until the balance is cleared.
What is the universal deferred payment scheme?
This is the formal name for the current system, introduced by the Care Act 2014 and available across every council in England. Before 2014, councils could offer deferred payments but were not obliged to. The universal scheme made them a legal right for anyone who meets the qualifying criteria, which is why the terms are broadly consistent wherever you live.
How does the scheme work in practice?
- You have a care needs assessment and a financial assessment, which establish that you need permanent care and must pay for it yourself.
- You apply to the council for a DPA. Most councils have a dedicated deferred payments team.
- The council values your property and works out the maximum it will lend against it.
- You agree how much of your weekly income you will contribute and how much will be deferred.
- The council registers a legal charge at the Land Registry, usually a first charge.
- Each week the council pays the deferred portion of your fees, and the debt grows.
- The agreement ends when you sell, leave care permanently, repay in full, or die.
There are two structures in common use. Either the council pays the care home directly and waits to be repaid, or the council lends you the money, and you pay the home yourself. The effect is the same.
Is this the same as a payment holiday or a buy now pay later deal?
No. A care DPA is not consumer credit. It is not regulated by the Financial Conduct Authority, it is secured on property rather than granted on the basis of a credit check, and it does not have a set repayment schedule or a fixed term. If you have arrived here looking for information about deferred retail finance, instalment plans or deferred interest credit cards, this is a different thing entirely.
Who qualifies
Who qualifies for a deferred payment agreement?
To be entitled to a DPA in England, you must meet all four of these conditions.
1. You are moving permanently into residential or nursing care. Temporary and respite stays do not qualify.
2. You own a property that is not disregarded in your financial assessment. If a spouse, civil partner or qualifying dependent relative still lives there, the property is disregarded, and a DPA is not needed.
3. Your assets other than the property are below the upper capital limit of £23,250. Your savings must also stay below that level for the agreement to continue.
4. The council considers the arrangement financially viable, meaning there is enough equity to support it.
What if I do not meet all four conditions?
Ask anyway. Councils have discretion to offer a DPA to people who fall outside the mandatory criteria, for example someone with savings slightly over the capital limit, or someone in supported living rather than a care home. These are known as discretionary agreements. The terms may differ, and the council is not obliged to agree, but a near miss on one criterion is not automatically the end of the conversation.
What property qualifies, and how much can I defer?
The charge is normally secured against your main home. The council carries out its own valuation, then works out the maximum deferral as follows:
Property value, less 10% for estimated selling costs, less any outstanding mortgage or other secured debt, less the mandatory £14,250 equity buffer that councils must leave untouched.
That figure is your equity limit. On a £250,000 property with no mortgage, for example, the maximum deferral is £250,000 less £25,000 less £14,250, which comes to £210,750.
The property normally needs to be registered at the Land Registry, and the council will usually require a first legal charge. Joint ownership, unregistered land or an existing mortgage can all complicate matters without necessarily ruling out an agreement.
What a DPA costs
Do deferred payments have interest?
Yes, and this is the part most people underestimate. Interest is charged on the full outstanding balance, including any fees that have been added to the loan, from the first day of the agreement until the debt is cleared in full.
How is interest calculated?
The maximum rate councils may charge is set nationally in the Care and Support (Deferred Payment) Regulations 2014. It is the 15-year market gilt rate from the most recent Office for Budget Responsibility forecast, plus 0.15%.
The rate is reviewed twice a year, on 1 January and 1 July, and the current maximum from 1 July 2026 is 4.65%. Interest is compounded daily by most councils.
Recent rates give a sense of how much this moves. The maximum stood at 4.65% for the first half of 2024 before falling to 4.05% for the second half. It rose again to 4.25% in January 2025 and to 4.65% that July, reached 4.75% for the first half of 2026, and now sits at 4.65% from 1 July 2026.
Your council cannot charge more than the national maximum, though it may charge less. Most charge the maximum. Because the rate is reset every six months, the cost of a long-running agreement is not fixed at the outset, and a DPA taken out today may be considerably more or less expensive in five years.
Because interest compounds, the balance grows faster the longer the agreement runs. The calculator above models this year by year so you can see how the debt builds under different care cost and duration scenarios.
Are there fees?
Yes. Councils may charge a set-up fee covering the property valuation, Land Registry searches, registering the legal charge and administration. These vary widely in practice, from a few hundred pounds to over a thousand. Many councils also charge an annual administration fee and a termination fee when the agreement closes.
Fees must not exceed the council's actual costs, because councils are not permitted to run the scheme at a profit, and you should receive a written schedule of all charges before signing. You can usually choose to pay the set-up fee separately or add it to the loan. Adding it means paying interest on it, so pay it upfront if you can.
How much will I still have to pay each week?
This is the point most guides skip. A DPA does not cover your whole fee. You are still expected to contribute towards your care from your income, and you defer only the balance.
What you are allowed to keep is called the Disposable Income Allowance, set at up to £144 a week in England. It is intended to cover insurance, maintenance, utilities and upkeep on your empty property, along with your personal spending, and it includes the Personal Expenses Allowance within it.
You can choose to keep less than £144 if you want to. Doing so means contributing more from your income, deferring less, and building up less interest, which can make a real difference over several years. The choice is entirely yours, and your council must not push you towards keeping less than the full allowance.
Use the calculator above to see how your weekly contribution and your deferred balance interact.
How long a DPA lasts
How long does a deferred payment agreement last?
There is no fixed term and no maximum number of years. A DPA runs until one of the following happens: you sell the property, you repay the balance from another source, you leave care permanently, or you die.
In practice, most agreements end on death, when the property is sold and the debt settled from the proceeds. Others are used as a short bridging arrangement lasting only a few months, while a family decides whether the move into care is permanent and clears the house before selling.
Is there a 12 month limit?
No. Twelve-month deferral periods belong to retail and consumer finance, not to the care scheme. A care DPA has no equivalent fixed window.
There is a separate 12 week rule worth knowing about, though it is a different thing. When you first move permanently into a care home, the value of your property is disregarded entirely for the first 12 weeks, and the council may help with fees during that period. A DPA typically begins once that disregard ends.
Is there any practical limit on the length?
Yes, and it is financial rather than temporal. Once your deferred balance reaches the equity limit, the council will normally stop deferring further fees, and you will have to fund your care another way, usually by selling the property.
Note carefully that reaching the equity limit does not stop the interest. Interest continues to accrue on the outstanding balance even after the council has stopped lending. On a long stay in an expensive area, this is the scenario to plan for.
How many times can you have a deferred payment agreement?
There is no limit in principle. If an agreement ends and is repaid in full, you can apply again later provided you still meet the criteria and still have sufficient equity. In reality, the equity in a single property tends to be the binding constraint rather than the number of applications.
If you move between care homes, or between council areas, the agreement may need to be varied or replaced. Tell your council before you move rather than afterwards.
The drawbacks
What are the disadvantages of a deferred payment agreement?
An honest list, because these are the questions people actually search for.
Compound interest reduces the estate. This is the main one. Over a stay of several years, interest can consume a meaningful share of the property's value, and the longer the arrangement runs, the more it takes.
Interest does not stop when the lending does. It continues after you reach the equity limit, and it continues after death until the estate settles the debt.
Fees add up. A set-up fee, annual administration charges and a termination fee, plus your own legal costs. If these are added to the loan, they attract interest too.
You remain responsible for the property. Insurance, heating, maintenance, repairs and security on an empty house are all yours, and an empty property can be expensive to insure. This is what the Disposable Income Allowance is meant to cover, and £144 a week does not always stretch far enough.
You are exposed to the property market. If values fall, your equity shrinks while the debt keeps growing.
Your family cannot simply keep the house. The debt has to be settled, so unless the estate can repay from other funds, the property will still be sold. A DPA delays that outcome; it does not avoid it.
The rate is not fixed. It resets every six months and may rise substantially over a long agreement.
Executors face a deadline. The balance falls due 90 days after death, which can be tight for a probate sale.
Are deferred payments bad for your credit rating?
No. A care DPA is not consumer credit; it is not reported to credit reference agencies, and it will not appear on a credit file or affect a credit score. What it does create is a legal charge registered against your property at the Land Registry, which will be visible to any solicitor acting on a future sale or remortgage.
So is a deferred payment agreement a good idea?
It depends on what you are trying to achieve, and it genuinely does not suit everyone.
A DPA tends to work well if the stay in care may be short or the situation is still uncertain, the property market is weak, and you would be selling at a poor price, the house needs clearing or repair before it can be sold properly, a family member needs time, or you want to keep the option of returning home open.
A DPA tends to work badly if the stay is likely to be long, the equity is modest relative to the fees, the property is expensive to maintain and cannot be let, or preserving the maximum possible inheritance is the priority. In those cases an early sale often leaves the estate better off.
Repayment
When is a DPA repaid?
You can repay at any time, in full or in part, and there is no early repayment penalty. People commonly repay when the property sells, when an inheritance or other funds arrive, or when circumstances change.
The full balance, including accrued interest and any outstanding fees, falls due when the agreement ends. That is normally when you sell the property, leave care permanently, or die.
Making partial repayments along the way, or paying the interest as it arises rather than letting it roll up, will reduce the eventual total considerably. It is worth asking your council whether it offers this, because many do and few advertise it.
What happens after death?
The debt becomes payable within 90 days of death, and responsibility for settling it falls to the executor of the estate. Interest carries on accruing throughout that period and until the debt is cleared.
Most councils will allow longer where a sale is genuinely progressing, and there is a good reason for the delay, but they can take legal action to recover the money if they conclude that no active steps are being taken. Executors should contact the council early and keep it informed rather than waiting to be chased.
Alternatives and variations
Can I rent out the property?
Usually yes, and it is often overlooked. Letting the house generates income that reduces the amount you need to defer, which directly reduces the interest you pay. Councils generally expect rental income to be used this way, though they should let you keep a proportion to cover the costs of being a landlord. Tell the council before you let the property, because it affects both your financial assessment and the terms of the charge.
A DPA or selling the home?
Selling immediately locks in today's market value, ends the interest, removes the maintenance burden and gives certainty. It is often the better financial outcome over a long stay. What it costs is flexibility, and it can be very hard to do in the middle of a crisis.
A DPA buys time and preserves options, at a price that rises the longer it runs. Neither is automatically right. The variables that decide it are how long care is likely to last, how much equity there is relative to the annual fee, and what the property market is doing.
Scotland, Wales and Northern Ireland
Scotland operates a deferred payment scheme with an important difference: no interest is charged during the agreement. Interest becomes payable only if you end the agreement, or from 56 days after death.
Wales runs a scheme closely modelled on the English one, using the same gilt rate plus 0.15% formula reviewed each January and July. Its capital limits differ from England's.
Northern Ireland has no formal deferred payment scheme. Arrangements may be possible on a case-by-case basis through your local Health and Social Care Trust.
Before you sign
A DPA is a secured loan against your home, taken at a stressful moment, with consequences that unfold over years. Get a written schedule of every fee, ask the council for a worked illustration showing the balance year by year at the current rate, and take independent advice from a financial adviser who specialises in care fees before committing.