New Rules
From 1st October, 2001 the government has introduced a new scheme that allows you to put off the sale of your home during your lifetime. This new scheme is called the Deferred Payments Scheme.
This will mean that the Local Authority is able to offer Service Users a loan to pay any shortfall in their care costs, which would have been funded from the sale of their property.
This loan would then be repaid to the Local Authority when the property is sold.
To take advantage of the scheme you should meet the following criteria:-
- You own a property or have a beneficial interest in a property.
- You do not have savings above £20,500 other than the value of your home.
- You do not wish to wish to sell your home during the time you are in the residential or nursing home.
- You would like to sell your home but it may take some time to do this, therefore you will not be able to pay the full cost of your care until its sold.
- Your property is worth enough to cover the cost of your care once it is sold, i.e. over £20,000.
- There is no outstanding mortgage, or if you do have an outstanding mortgage, then once it is paid it will leave you with over £20,000.
Please note that if you do not meet the above criteria there may still be ways that the Local Authority can help you. You should talk to your Social Worker about this.
What Do I Do if I Want to Take Advantage of the Scheme?
If you wish to take advantage of the scheme you will need to agree to the Local Authority placing a legal charge on your property. A legal charge is like a mortgage, which means that the Local Authority is loaning you the money to pay for your care costs.
This money that is being loaned to you must be repaid when any of the following occurs:-
When the property is sold whilst you are still in the home.
When your estate is administered and your property is subsequently sold. This will be before any will is dealt with.
Further Information
The following are further things you should consider about using this scheme:
This will enable my care costs to be met until I can sell my property.
I can repay the Local Authority once my property is sold.
A legal charge will have to be placed on my property. I will have to sign a document to agree to this.
I may have to spend money from my own resources to maintain a property that I have not yet sold.
If I rent out the property any money I receive will have to be used to contribute towards my care costs and this will then reduce the amount of the loan.
If I don't put my property up for sale I will not be able to receive income support which will increase the amount that I will owe the Local Authority.
Whilst the money is still owed to the Local Authority and the legal charge is still in place I will not be able to sell or transfer ownership of the property.
I will have to pay interest 56 days after the agreement ends. If my property has not been sold by then this could be a considerable amount if I owe a large amount to the Local Authority.
The Local Authority will always try to offer this scheme to everyone that has a property and should pay the full cost of their care themselves but where resources are limited service users will be informed.
Important Note
As with all important decisions such as these, you should talk to your family or seek independent financial advice.
If there are any aspects of the scheme that you do not understand or you have any questions about the scheme then you can talk to a Financial Assessment Officer on Rotherham 01709 822360.
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