Deferred payment scheme
What is the Deferred Payments Scheme?
The Deferred Payments Scheme is designed to help you if you:
- Have been assessed as having to pay the full cost of your residential care and
- Cannot afford to pay the full weekly charge because most of your capital is tied up in your home.
The scheme offers you a loan from the London Borough of Newham using your home as security.
Unlike a conventional loan the London Borough of Newham doesn’t give you a fixed sum of money when you join the scheme. Instead they pay an agreed part of your weekly care and support for as long as is necessary.
The weekly cost of the care home is agreed between us and the provider before you move in.
Based on the information that you gave us as part of the financial assessment we will work out how much you can afford to pay each week from your income and other savings.
This is taken away from the cost of the care home and the amount that is left will be paid by the council. The part the Council pays is your ‘Deferred Payment’.
The Deferred Payment amount builds up as a debt – which is payable when the money tied up in your home is released. For many people this will be done by selling their home.
Who can apply?
In order to apply for the Deferred Payment Scheme you must meet the eligibility Criteria set out in the Deferred Payment Policy as below:
- That the individual has eligible care and support needs that the London Borough of Newham determines will be met through a permanent care home placement
- The individual has less than £23,250 in capital. This doesn’t include the value tied up in their property.
- The property does not meet one of the qualifying disregard criteria i.e. spouse or dependent is still resident in the property
- The person entering into the agreement has the capacity to do so or
- Has a legally appointed representative to manage Finance and Property.
There can be no other beneficial interests on the property, for example outstanding mortgages or equity release schemes, unless this is approved by the Local Authority.
Your agreement with London Borough of Newham
If you decide to use the Deferred Payments Scheme, you enter into a legal agreement with the London Borough of Newham by signing an agreement document.
The London Borough of Newham will then place what is called a ‘legal charge’ on your property to safeguard the loan.
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 when you leave the care home and the loan becomes payable 90 days later.
The Council cannot cancel the agreement without your consent.
Allowable expenses
You can choose to keep back up to £144 per week from your disposable income to help you pay for expenses for the upkeep of your home such as:
- Mortgage payments
- Insurance payments.
You can choose to keep less than the £144 weekly limit which will reduce the amount that is deferred against the property.
We will talk to you about your options during the deferred payment discussions.
Other options
You may choose to rent out your property, which could give you enough income to cover the full cost of your care.
There are advantages to this:
- You will not accrue a debt
- Your property will be occupied
- Your tenant will be paying utilities and council tax which will reduce your outgoings.
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
- A family member may choose to pay some or all of this for you.
You should take independent financial and legal advice to help you decide which course of action will be financially better for you.
How to apply
Your care manager will ask you for basic information and pass your details onto the Financial Assessment & Charging Team.
You will then be contacted to arrange an appropriate contact i.e. face to face or telephone call to discuss the Deferred Payments Scheme in more detail.
