A deferred payment agreement, usually shortened to DPA, is the council paying your care home fees now and recovering the money later from the sale of your property or from your estate.
It is genuinely useful. It means nobody has to sell a house in a hurry, in a bad market, in the first weeks of a crisis. It is also a loan secured against a property, and it is presented to families far more often as a relief than as a financial product.
How it works
The council pays the fees, or part of them, and registers a legal charge against the property. No sale is forced while the person is alive. When the property is sold, or on death, the accumulated amount plus interest and any administration fees is repaid.
You generally have to be eligible: broadly, having assets above the upper capital limit largely tied up in a property, without enough other capital to pay the fees. Councils in England have a duty to offer a DPA to people who meet the criteria, so it is an entitlement rather than a favour.
Most councils expect you to contribute from your income while the deferral runs, keeping back a disregarded amount for personal expenses. That reduces how fast the balance grows.
The interest, which is the point of this guide
Interest is charged, it compounds and it accrues on a balance that gets larger every week.
The maximum rate is set nationally and reviewed twice a year, in January and July. It is pegged to gilt market rates plus 0.15%. As of July 2026 the national maximum is 4.65%, having been 4.75% for the first half of the year. Individual councils may charge less, and they may add a separate administration fee, so ask for both.
Verify the current rate before you sign, because it will have moved by the time you read this.
The arithmetic, done honestly
Take a fairly ordinary case. Fees of £1,200 a week, of which £400 is met from income, leaving £800 a week deferred. That is roughly £41,600 a year added to the balance.
After five years you have deferred about £208,000 of fees. Interest at around 4.65%, compounding on a balance that has been growing throughout, adds roughly £25,000 to £30,000 on top. So the estate repays somewhere near £235,000 rather than £208,000.
Run it for ten years and both numbers roughly double while the interest element grows faster than the fees, because it is compounding on a much bigger balance.
None of this makes a DPA a bad decision. It makes it a decision with a price, and the price is usually described to families as “interest is charged” without anyone showing them what that means over the likely duration.
What to ask for before signing
One request does most of the work. Ask the council, in writing, for a projected balance at two, five and ten years, showing fees and interest separately, at the current rate.
Then ask what the administration and set-up fees are, whether the rate is fixed or tracks the national maximum, whether you can make partial repayments and what happens if the property is rented out during the deferral.
That last point is worth pursuing. Renting the property produces income that can cover part of the fees and slow the growth of the balance considerably. Many families do not realise it is permitted.
The alternatives worth weighing
A DPA is one of four broad routes and it is worth at least looking at the others.
Sell and invest the proceeds. Removes the interest cost entirely and gives you flexibility. Against that, it forces a sale on someone else’s timetable and loses any future growth in the property.
Rent the property out. Produces income towards fees while keeping the asset. Brings landlord responsibilities and does not usually cover the whole cost.
An immediate needs annuity. A one-off lump sum buys a guaranteed income paid directly to the care provider for life, which caps the total cost and removes the risk of a long stay draining the estate. It is regulated advice territory and the pricing depends heavily on health, so it needs a specialist.
Equity release. Occasionally appropriate, frequently expensive and it interacts with the means test. Take independent advice before going near it.
Why this one needs proper advice
The variables are the person’s likely length of stay, the interest rate, the property market and the family’s own position, and small changes in any of them move the answer. This is one of the genuinely few household decisions where paying for regulated advice reliably pays for itself.
Look for an adviser accredited by the Society of Later Life Advisers, who specialise in exactly this. The Money and Pensions Service can also point you to free impartial guidance if you want to understand the landscape before paying anyone.
If you are not in England
Care funding is devolved and the differences are substantial rather than cosmetic. Scotland provides free personal and nursing care as flat weekly payments regardless of income or assets, and its capital limits are more generous than England’s. Wales uses a single capital limit and caps the weekly charge for care at home. Northern Ireland runs its care system through Health and Social Care Trusts rather than councils. Everything below describes England. If you are elsewhere, start with Care Information Scotland, the Welsh Government social care pages or nidirect, because the thresholds quoted here will not apply to you.
Where FamilySafe fits
A deferral runs for years and is usually settled by someone other than the person who signed it. FamilySafe keeps the agreement, the interest projections and the annual statements with the property record, so whoever eventually deals with the estate knows exactly what is owed and to whom.
Sources
- Care Act 2014 and the Care and Support (Deferred Payment) Regulations 2014
- Care and support statutory guidance, chapter 9 on deferred payment agreements
- GOV.UK: deferred payment agreements guidance for local authorities, including the national maximum interest rate
- Age UK factsheet 38: property and paying for residential care
This is general information about how care funding works, not financial advice. Rates and thresholds change every April. Check the current figures on GOV.UK or with your local council, and take regulated advice before making a decision about a property or long-term funding.
