Deferred payments are effectively a loan to be repaid when your property is sold, or you die. However, the scheme does not work in exactly the same way as a conventional bank loan.
Instead the council will pay the full cost of your care to your residential home on a monthly basis, for as long as necessary, providing there is enough value left in your property to cover these costs.
You will still be financially assessed and have to pay a weekly client contribution towards your care during the period of the deferred payment.
You will be assessed to decide what you can afford to pay and the council will pay the shortfall. The part the council pays is your ‘deferred payment’. The deferred payment builds up as a debt which must be repaid when your home is sold.
Many people sell their home either immediately or later on. However, you do not have to sell your home if you do not want to during the period of the deferred payment.
You may for example, with the council's permission, decide to rent it out to generate income.
If you do this, the income must be declared and used to contribute to your care home costs. This will reduce the amount of deferred payment which has to be repaid when your property is sold.