What is a Deferred Payment Agreement — and Should You Use One?
A Deferred Payment Agreement (DPA) is an arrangement with your local council that allows you to use the value of your home to fund care costs without having to sell it immediately. The council effectively lends you the money to pay for care, and the debt — including interest — is repaid when the property is eventually sold, either during your lifetime or after death.
Who qualifies?
To be eligible for a DPA you must: have savings and assets below £23,250 excluding your property value; be living in a registered care or nursing home; own a property; and the property must not currently be occupied by a qualifying person — typically a partner, dependent child, or a relative aged 60 or over.
How does it work in practice?
The council pays the care home on your behalf, and the debt accumulates with interest. The maximum interest rate is set by the government and is currently around 4.75% APR, reviewed twice yearly. You retain ownership of your home throughout. The debt is repaid when the property is sold — whether that is during your lifetime or from your estate after death. You are responsible for ongoing property maintenance, insurance and any running costs while the DPA is in place.
Pros and cons
The main advantage is that it removes the pressure to sell the family home quickly — giving families time to make the right decision rather than a rushed one. It can also be helpful for couples where one partner enters a care home and the other remains in the property. The main downside is that the debt grows steadily with interest over time, reducing the eventual equity available to the family. For people who live a long time in care, the total debt can become significant.
Is it right for everyone?
Not always. For families with strong assets, selling and investing the proceeds with specialist advice may generate better returns than the DPA interest rate. For others, particularly those with strong emotional attachment to the family home, a DPA offers valuable breathing room. The right decision depends entirely on individual circumstances — this is precisely where a SOLLA-accredited financial adviser adds real value.
We work alongside SOLLA-accredited financial advisers who can advise on whether a Deferred Payment Agreement is the right choice for your family. Speak to an adviser →