Local authorities are not required to offer a deferred payment, but if they do not, they must explain the reason in writing. For example, they won`t accept a deferred payment if they think your home isn`t worth enough to cover your retirement home expenses. The premises have the right to calculate interest on the deferred payment, but the government sets the maximum interest rate that they are allowed to calculate. In England, this is based on interest rates on the gilded market plus an additional 0.15%; The rate is revised every six months. Similar methods are used to calculating interest rates in Scotland and Wales. A deferral payment contract is an agreement with the local authority that allows people to use the value of their homes to pay the cost of care homes. From this you should deduct interest and fees for the deferred payment system, the maintenance and insurance costs of the home and the fees for each owner you use. Your municipality may (but should not) charge interest on deferred payments to cover the costs. You sign a legal agreement stipulating that the money will be refunded if your home is sold.
Local authorities may also charge installation and management fees. However, these should only cover the costs of setting up the loan. You cannot take advantage of the agreement. In England and Wales, the local authority can determine the amount it calculates. But this can only be a standard government rate, which is linked to the “market gilding rate” plus 0.15%. At present, this is just over 1% per year. You can also compare with a deferred payment contract with the alternative, z.B. Sell your home and put the product into a savings account. Each income contribution you make under the agreement reduces the total amount you must defer, so there is less to repay when the property is sold.
A deferred payment contract works in the same way as a share release system from a commercial supplier. You can compare this to see what`s right for you. The LAC Circular (DH) (2015)3 sets the discounted rate of deferred payment agreements (DPA) for July 1, 2015 until December 31, 2015. The most common situation in which you should consider a deferred payment contract is when your savings and other assets (excluding your home) are low, but the value of your home makes you cross the payment threshold for some or all of your own care home costs themselves. A deferral of payment means that you do not have to sell your home during your lifetime to pay the care costs.