How to Pay For a Care Home with No Money

If you’re worried about affording care home costs with limited savings, you’re not alone.

The reality is stark. Residential care in the UK now averages around £67,600 per year, with nursing care costing closer to £78,600 annually (Lottie, 2026).

But here’s what many families miss: “no money” doesn’t always mean you’re on your own.

The system can be genuinely confusing. Many people don’t know about fully funded NHS care options or how to protect their home from the means test.

This guide walks you through five realistic funding routes, from NHS Continuing Healthcare (which covers everything) to council support, deferred payments, equity release, and selling your property when that makes sense. You’ll also learn which exemptions protect your home and what mistakes to avoid.

(Already know the costs? Skip to What “No Money” Actually Means or jump straight to funding options.)

Understanding Care Home Costs in 2026

Before exploring funding options, let’s be clear about what you’re facing.

Current Average Costs

Based on 2026 data:

Dementia care is often higher due to specialist staffing and environment.

These are national averages. London and the South East cost significantly more, while the Midlands and North of England tend to be more affordable (CareHomeGuide, 2026).

Why such a big range?

Why Costs Vary

Care home fees depend on:

• Location: property costs drive care home overheads
• Level of care: nursing and dementia care cost more than residential
• Room type: single rooms with ensuite facilities cost more
• Funding source: self-funders often pay more than local authority-funded residents in the same home

The postcode lottery is real. A care home in Kensington might charge £2,000+/week while a similar home in Yorkshire charges £900/week.

So how do you pay for this? Let’s start by understanding what “no money” actually means to the council.

What “No Money” Actually Means

When councils assess whether you can afford care, they run what’s called a means test: a financial assessment that looks at your capital (savings, investments, property value) and your income (pensions, benefits).

Here’s how the means test works in 2026:

England

Source: Gov.uk, Charging for care and support, 2025-26

Wales

Wales is more generous:

• Upper capital limit: £50,000 (since April 2019)

If you’re in Wales with capital below £50,000, your local authority will help pay for residential care (Gov.wales, 2023).

Property and the Means Test

Your home is usually included in the means test, but NOT always.

Your property is excluded from the assessment if:

• Your spouse, partner, or civil partner still lives there
• A relative aged 60+ lives there
• An incapacitated or disabled relative lives there
• Your child under 18 lives there
• A lone parent who is your estranged or divorced partner lives there

If none of these apply, your property’s value counts toward the capital limit after 12 weeks (more on that shortly).

What about that £86,000 care cap you might have heard about?

What About the Care Cap?

You might have heard about the £86,000 care cap that was proposed in England to protect people from catastrophic costs.

It was cancelled.

The previous government had planned to introduce this under the Health and Care Act 2022, but in July 2024, the new government announced these reforms will not be taken forward (House of Commons Library, 2026).

So the capital limits above remain the reality for 2026 and beyond.

The 12-Week Property Disregard: Your Breathing Space

Before we dive into your funding options, here’s something critical to know: if you’re moving into permanent care and your property isn’t otherwise protected, you get 12 weeks of breathing space.

For the first 12 weeks after you move into permanent care, your property’s value is ignored in the financial assessment, provided your other assets (savings, investments) are below £23,250 in England (Age UK Factsheet 38, 2025). Wales also applies a 12-week property disregard where your other capital is below the Welsh limit of £50,000.

This gives you time to arrange a property sale without pressure, apply for a deferred payment agreement, explore equity release, or decide whether selling is the right option.

After 12 weeks, the property’s value is included in the means test, unless you’ve arranged a DPA or the property qualifies for permanent disregard. This doesn’t mean you’re forced to sell immediately, but the council may charge you the full cost of care from that point if your total capital exceeds £23,250.

Bottom line: Don’t panic. You have options, and you have time to explore them properly.

Speaking of options, let’s walk through five realistic funding routes, starting with the one most people have never heard of.

(Need to sell quickly? Jump to Option 5: Selling Your Property.)

Option 1: NHS Continuing Healthcare (Fully Funded)

This is the option most people don’t know about.

NHS Continuing Healthcare (NHS CHC) is completely free care, fully funded by the NHS, regardless of your savings or income.

Who Qualifies?

You qualify if you have a “primary health need”. In plain English, this means your care needs are driven by medical conditions rather than just day-to-day personal support.

It’s assessed based on the nature, intensity, complexity, and unpredictability of your needs. There’s no specific diagnosis required, but conditions like advanced dementia, Parkinson’s, MS, stroke recovery, and terminal illness often qualify (NHS, 2026).

How to Apply

In England, contact your local NHS Integrated Care Board (ICB). In Wales, contact your Local Health Board (LHB). Alternatively, ask the hospital or care home to arrange an assessment.

The process involves two stages:

1. Checklist assessment: a quick initial screening to see if you’re likely eligible
2. Full assessment: if the checklist suggests you qualify, a team of health professionals (doctors, nurses, social workers) conducts a detailed review

This can take several weeks, but if successful, all care costs are covered: accommodation, personal care, nursing, everything.

The catch? Most applications get rejected. But it’s worth trying.

If NHS CHC doesn’t work out, don’t worry. Your local council may still step in to help.

Option 2: Local Authority Support (Means-Tested Funding)

If you don’t qualify for NHS CHC, your local council can help fund care, if your capital is below the threshold.

The Financial Assessment

Your council will conduct a “means test” looking at:

• Savings and investments
• Income (pensions, benefits, rental income)
• Property value (with exemptions noted above)

This determines how much you’ll contribute toward care costs.

How to Get Assessed

Contact your local council’s adult social care department about three months before you need to move into care.

Ask for both:

1. Care needs assessment: to determine what level of care you need
2. Financial assessment: to determine what you’ll pay

Don’t delay this. The assessment process can take weeks, and you’ll want answers before making decisions about selling property or moving.

So what will the council actually cover?

What the Council Will Pay

If your capital is below the threshold, the council will cover the difference between what you can afford and the cost of care.

However, and this is important, the council only pays for care homes it has arranged, and it generally pays its own negotiated rates, which are often lower than self-funder rates.

This can limit your choice of care homes. Many homes have few or no council-funded places available.

But what if you own a property and don’t want to sell immediately? There’s a clever solution for that.

Option 3: Deferred Payment Agreements

Here’s a solution many people miss. You can use your home’s value to pay for care without selling immediately.

What Is a Deferred Payment Agreement (DPA)?

A DPA is essentially a loan from your local council. Instead of selling your house immediately, the council pays the care home on your behalf. The debt gets repaid when your property eventually sells, usually after you pass away or decide to sell.

The council pays the care home on your behalf, and the debt (plus interest and fees) is repaid from your estate when the property sells.

Who Qualifies?

In England, you generally qualify if:

• Your assets (excluding your home) are below £23,250
• You own your home
• Nobody else lives in the property (spouse, partner, dependent relative)
• You’re assessed as needing permanent residential care

In Wales, local authorities must also offer deferred payment agreements under the Social Services and Well-being (Wales) Act 2014. Eligibility criteria are similar: your capital (excluding the property) must be below the Welsh capital limit of £50,000, and the council must be able to obtain a legal charge over the property.

Costs

As of January 2026, the maximum interest rate is 4.75% per annum (compounded daily), plus an administration fee (which varies by council) (MoneyHelper, 2026).

Why Consider This?

A DPA gives you time. You’re not forced into a quick sale under pressure, which often means accepting below-market value.

You also retain ownership of your property until you or your estate chooses to sell.

The downside: Interest accrues every day, slowly eating into your estate. If care lasts five or ten years, that debt can grow substantially. For long-term care, selling sooner might actually preserve more for your family.

Another way to access your property’s value without selling is equity release, though it works quite differently.

Option 4: Equity Release

If you want to avoid selling but need funds immediately, equity release is another option.

What Is Equity Release?

Equity release lets you access the value locked in your home without selling. The two main types are:

1. Lifetime mortgage: a loan secured on your home, repaid when you die or move into long-term care
2. Home reversion plan: selling part or all of your property in exchange for a lump sum or regular payments

Using Equity Release for Care

Some people use a drawdown lifetime mortgage, taking regular sums to cover care fees as they arise. Others take a lump sum to buy an immediate needs annuity, which then pays care fees indefinitely (Age UK, 2026).

Is it the right choice? That depends on your circumstances.

Important Considerations

Equity release isn’t right for everyone:

• Interest rates are typically higher than standard mortgages
• The debt grows over time (if interest isn’t paid monthly)
• It may affect your eligibility for means-tested benefits
• Your estate will be reduced

Equity release is regulated by the Financial Conduct Authority (FCA). Speak to a qualified adviser who specialises in equity release before proceeding.

For many families, though, a straightforward sale is still the quickest and clearest path forward.

Option 5: Selling Your Property

For many people, selling the property is the most straightforward way to fund care.

When Selling Makes Sense

Consider selling if:

• Your property isn’t protected (no partner/dependent living there)
• You need funds quickly and can’t afford to wait
• A DPA or equity release doesn’t suit your situation
• The property is empty and becoming a burden (maintenance, security, bills)

How Property Rescue Can Help

This is where our experience comes in.

Over the last three years, we’ve completed over 500 property purchases with an average completion time of 28 days from offer acceptance. Our fastest completion was just 7 days for a repossession case in Kent.

We provide a preliminary cash offer of your enquiry, and we handle all legal costs. There are no agent fees, no repair costs, and no chain to worry about.

Typical clients selling for care funding include:

• Families managing probate after a parent moves into care
• Executors needing to release funds quickly
• Owners of properties in poor condition that would struggle on the open market

Now, before you make any decisions about your property, there’s something critically important you need to know.

What NOT to Do: Deprivation of Assets

Here’s the warning: don’t try to hide assets or give them away to avoid care fees.

What Is Deprivation of Assets?

Deprivation of assets occurs when someone intentionally reduces their capital to avoid or reduce care fees, for example, by:

• Gifting money or property to family members
• Selling assets below market value
• Transferring property into someone else’s name
• Spending money recklessly to reduce savings

Why This Is Risky

If the council suspects deliberate deprivation, they can:

1. Treat you as still owning the asset (“notional capital”) and charge you accordingly
2. Pursue the person who received the asset to recover the costs
3. Investigate transactions going back indefinitely: there’s no time limit (Age UK Factsheet 40, 2025)

The test is whether you had a need or expectation of care when the asset was disposed of.

Giving your house to your children five years before needing care might be fine, but doing so six months before applying for council funding? Huge red flag.

Legitimate Financial Planning

There’s a difference between legitimate financial planning (estate planning done years in advance without care needs in mind) and deliberate deprivation (giving away assets specifically to qualify for funding).

If you’re considering any financial arrangements involving property or large sums, speak to a solicitor or financial adviser who understands care funding rules first.

On the flip side, some situations genuinely protect your home from being counted. Let’s look at those.

Protecting Your Home: Exemptions You Should Know

Your property may be permanently exempt from the means test in certain situations:

Partner or Spouse

If your husband, wife, or civil partner still lives in the property, its value is completely disregarded: no matter how much it’s worth.

Dependent Relatives

The property is also protected if a dependent relative lives there, including:

• A relative aged 60 or over (no requirement for them to be dependent on you)
• A child under 18
• A disabled relative (any age)

Former Partners

A former partner who is a lone parent and is your estranged or divorced partner may fall within the mandatory disregard categories.

Local authorities also have separate discretionary powers to disregard property in other exceptional cases, so it’s worth discussing your specific situation with the council’s financial assessment team.

One more tax question that often comes up: what about inheritance tax if you sell the property?

Inheritance Tax and Care Home Fees

One question we’re often asked: if you sell the property to fund care, does that affect inheritance tax?

The Residence Nil-Rate Band

Normally, if you pass your main residence to direct descendants (children, grandchildren), you can claim the residence nil-rate band (RNRB): an additional £175,000 IHT allowance per person (on top of the standard £325,000 nil-rate band).

Downsizing or moving to a care home doesn’t necessarily forfeit the residence nil-rate band. If you meet the downsizing provisions, your estate may still qualify for the RNRB even though the property was sold to fund care.

This is a complex area. If your estate is likely to exceed the IHT threshold (£500,000 for individuals, £1 million for couples, these thresholds include the residence nil-rate band, which requires passing a qualifying home to direct descendants and tapers for estates over £2 million), speak to a tax adviser or estate planner before selling.

Right, we’ve covered a lot. Let’s wrap up with a clear action plan.

Next Steps: Getting the Right Advice

Care funding is complicated, emotionally charged, and the stakes are high.

Here’s your action plan, start with step 1 today:

1. Get a Care Needs Assessment
   Contact your local council’s adult social care department (or the NHS if you think NHS CHC might apply). Start this process at least three months before you need care. The assessment determines what level of care you need, whether you’re eligible for NHS CHC, and what the council can provide.
2. Get a Financial Assessment
   The council will assess your finances to determine what you’ll pay. Gather bank statements (last 12 months), property valuation, pension statements, and details of savings, investments, and other assets.
3. Explore All Your Options
   Before making decisions, understand NHS CHC (could be fully funded), deferred payment agreements (delay selling), equity release (access funds without selling immediately), council support (if capital below threshold), and selling the property (quickest access to funds).
4. Get Professional Advice
   This isn’t an area to navigate alone. Speak to a care funding adviser, financial adviser (for equity release, IHT, or estate planning), solicitor (for property transfers, DPAs, or estate issues), and your local council’s adult social care team.

Age UK and Independent Age also provide free guidance and support.

Summary: You Have Options

The right option depends on your health needs, financial situation, family circumstances, and how quickly you need to move into care.

Need to move fast?

If selling your property is the best path forward, Property Rescue can help you move quickly with certainty. We’ve worked with over 500 families in the last three years, and our compassionate, professional approach makes stressful situations easier.

Call 020 8634 0224 today for a no-obligation chat about your situation.