The Deferred Payment Scheme is available to home owners who are entering permanent residential or nursing care.
The Deferred Payment Scheme is designed to help you if you have been assessed as having to pay the full cost of your residential care but cannot afford to pay the full weekly charge because most of your capital is tied up in your home.
Effectively the scheme offers you a loan from Wigan Council, using your home as security. It doesn’t work in exactly the same way as a conventional loan – the local authority doesn’t give you a fixed sum of money when you join the scheme, but pays an agreed part of your weekly care and support bill for as long as is necessary.
The part the Council pays is your ‘Deferred Payment’.
The deferred payment builds up as a debt which is repaid when the money tied up in your home is released. For many people this will be done by selling their home, either immediately or later on. You can also pay the debt back from another source if you want to.
However you do not have to sell your home if you don’t want to – you may, for example, decide to keep your home for the rest of your life and repay out of your estate, or you may want to rent out your home to generate income. If you do this you will be expected to use the rental income to increase the amount you pay towards the cost of your residential or nursing home care costs each week. By doing this, the weekly payments reduce the eventual deferred payment debt.
Eligibility criteria
To be eligible for a deferred payment, you must be able to provide adequate security and meet all of the following criteria:
- Your care needs have been formally assessed as requiring, and then subsequently met by the provision of care in a registered care home (as defined in the Care and Support (Deferred Payment) Regulations 2014
- Have savings, investments or assets valued at or less than £23,250 (excluding the value of your home)
- Your home is not disregarded from the financial assessment, as defined in the Care Act2014 and section 34, 35 of the Care and Support Statutory Guidance.
In addition:
- You own or have a beneficial interest of the property and the property is registered with the Land Registry (if the property is not, you must arrange for it to be registered at your own expense)
- There should be no outstanding mortgage on the property (or if there is, the outstanding amount must leave sufficient value to meet the criteria for self-funding)
- You should have mental capacity to agree to and sign a Deferred Payment Agreement or have a legally appointed representative willing to agree and sign this.
Adequate security is defined as the Council being able to place first legal charge against your property on the land registry.
You must also be ordinarily a resident of the borough as defined by the relevant provisions of the Care Act 2014, section 39-41 and accompanying Statutory Guidance.
Refusal of a deferred payment application
A deferred payment agreement can be offered to those who meet the eligibility criteria outlined above and who are able to provide adequate security for the debt. However, the Council may still refuse a deferred payment application in some circumstances. Where an application is refused, you or your representative will be notified of the decision in writing.
Charging interest
The loan will have interest charged on it in the same way a normal loan would be charged on money borrowed from a bank. The maximum interest rate that will be charged is fixed by the government. Currently the maximum rate to be charged is based on the cost of government borrowing, and will change on 1st January and 1st July every year. This interest will be applied on a compound basis.
The interest will apply from the day you enter into the Deferred Payment Scheme. You will receive statements every 6 months advising you of how your charge is being calculated and the outstanding amount of your deferred payment debt.
Your agreement with Wigan Council
If you decide to use the Deferred Payments Scheme, you enter into a legal agreement with the Council by signing an ‘Agreement’ document. The Council then places what is called a ‘legal charge’ on your property to safeguard the loan. You will be charged for this expense.
The agreement covers both the responsibilities of the Council and your responsibilities, one of which is to make sure that your home is insured and maintained.
You can end the agreement at any time (for example if you sell your home) and the loan then becomes payable immediately. Otherwise the agreement ends on your death and the loan becomes payable 90 days later.
Wigan Council cannot cancel the agreement without your consent.
Personal allowance
A financial assessment will be completed to determine how much you can afford to pay each week towards your residential or nursing home fees based on your income and savings and/or capital. The contribution you are asked to make will take into account your personal allowance, this is the amount you will be left with each week for your personal expenses.
The minimum amount of personal allowance is currently £30.65 per week and the maximum is £144.00 per week. You will need to consider how much you may need to retain to contribute towards the upkeep of your property. You can decide how much of your weekly income you wish to retain up to the maximum of £144 per week. A lower amount of personal income maybe to your advantage as this would mean you accrue less debt.
You can make a request to change the amount of your personal allowance at any time during the lifetime of the agreement but there will be a charge incurred for you to do so. Please refer to the Deferred Payment Scheme fees and charges table.
Advantages of using the Deferred Payment Scheme
If there is a ‘top up’ payment due to your residential/nursing home you can add this cost to your Deferred Payment Scheme loan if the Council agrees there is enough equity in your home. The government rules say that ‘top ups’, for people not pursuing the Deferred Payment Scheme, currently have to be paid for by someone else, for example a member of their family - so a deferred payment is currently the only way of paying the top up yourself without depending on a third party.
The amount of top up you decide to pay should be considered carefully as this may impact on the equity available in the property. This could result in the need to move from your current, more costly residential or nursing home if you become eligible for a council funded residential or nursing home.
You should take independent financial and legal advice to help you decide which course of action will be financially better for you.
- Legal costs
- Land Registry charges
- Administration charge
- Annual administration and revaluation fees
- Fees incurred at the end of the agreement to discharge the legal charge and restriction on the property
- Interest charges - the rate is calculated in line with government borrowing which is reviewed twice per year.
Valuations
Wigan Council cannot progress the Deferred Payment Scheme without an up to date valuation of your property. The purpose of the property valuation is to establish the available equity.
Valuations can be provided by:
- An independent Chartered Surveyor
- Estate Agents - 3 estate agent/opinions of value are required
- Wigan Council - at a cost of £140 (the cost of a desk top review of the valuation via Wigan Council is £70). If the deferred payment application is accepted then the fee can be added to your debt.
An updated valuation will be required periodically throughout the agreement.This is undertaken to ensure the deferred amount does not exceed the equity limit. Once your deferred payments exceed 50% of the equity, your property will need valuing more frequently and the council may also request to inspect the property.
Other payment options
You may choose to rent out your property, which may provide you with enough income to cover the full cost of your care and means you don’t have to use the Deferred Payment Scheme. There are advantages to this as you will not accrue a debt or be liable for interest and administrative charges and your property will be occupied. Your tenant will be paying utilities and council tax which will reduce your outgoings. If the rental income doesn’t give you enough money to cover the full cost of your care, you may still need to use the deferred payment scheme, but Wigan Council will allow 25% of any rental income to be retained.
There are also various equity release products which may be suitable for your personal circumstances.
You may also choose to pay the full cost of your care from your available income and savings/assets, or a family member may choose to pay some or all of this for you.
Is there anything else I need to know?
- You must have a responsible person willing and able to ensure that necessary maintenance is carried out on the property to retain its value, you are liable for any such expenses
- You must agree to insure your property at your expense
- You must make payment of your required contribution in a timely and regular manner, if you fail to pay your assessed element of the care costs on a regular basis the council reserves the right to add this debt to the loan amount
- You may incur costs if you apply for the Deferred Payment Scheme and then withdraw.
There can be no other beneficial interests on the property, for example outstanding mortgages or equity release schemes, unless this is approved by the Wigan Council.
Please note:
Acceptance of any application under the scheme is subject to you meeting the criteria and the local authority being able to obtain the appropriate level of security in your property.
The Department of Work and Pensions may not pay Pension Credit if the property is not up for sale. Please contact the Department of Work and Pensions if you have any queries regarding the payment of Pension Credit.
Deferred Payments Scheme fees and charges from 1st April 2025
| | Detail | Total cost per agreement |
|---|
| Initial application charge |
Financial assessment |
£197.00 |
| |
Legal costs |
£186.00 |
| |
Land registry fees |
£27.00 |
| |
Valuation fees (if completed by Wigan Council) |
£140.00 |
| |
Sub total set up costs |
£550.00 |
| Ongoing administration (per annum) |
Financial assessment follow-up |
£203.00 |
| |
Revaluation fees (if completed by Wigan Council) - desktop |
£70.00 |
| |
Revaluation fees (if completed by Wigan Council) - inspection |
£140.00 |
| |
Personal allowance variation request |
£175.00 |
| End/other one-offs |
Termination/final account preparation |
£58.00 |
| |
Discharge for legal charge |
£64.00 |
For further information regarding independent financial and legal advice please visit our Managing your money webpage.
If you require further information please contact:
Wigan Council, Financial Support Services Team
Phone: 01942 489458 or 489459
Financial assessment team contact form
Last updated: April 2025