The Nursing Home Loan: paying your share from your home after you die

Under Fair Deal you pay 7.5% a year of the value of your assets (3.75% for one member of a couple). For many families most of that comes from the family home, and there may be little cash to pay it with. The Nursing Home Loan, officially called ancillary State support, solves this.

If you take the loan, the HSE pays the property-based part of your contribution to the nursing home for you. The total is repaid later, usually from the estate after death. It is optional, and it sits on top of the State support you get from Fair Deal.

• You must be approved as needing long-term nursing home care.
• You must own land or property in the State, such as a house, land or business property.
• The loan is secured on that property with a charging order, which Citizens Information describes as a simple type of mortgage.

The 3-year cap still applies with the loan. If the loan covers the part based on your home, it stops growing after 3 years in care because the home no longer counts. The most it can reach from the home is 22.5% of the home's value, plus inflation adjustments (11.25% for one member of a couple).

1. Fill in Part 5 of the Fair Deal application form. You can apply at the same time as Fair Deal, or at any point while living in a nursing home.
2. Give written consent to the charging order. If you're part of a couple, your spouse or partner must also consent and sign.
3. The HSE makes and registers the charge and pays the loan amounts. You don't need to do anything else.

Applying can take several months because of the property documents involved, so the HSE advises applying together with Fair Deal. If you apply together, the loan is paid from the same date as your Fair Deal funding. If you apply later, it is paid from the date the loan is approved. You can change your mind and not take the loan even after it's approved.

If the person doesn't have capacity to consent, only a decision-making representative (or former care representative) appointed by the Circuit Court, a ward of court's committee, or the holder of a registered enduring power of attorney can apply for them. An enduring power of attorney has to be in place before the person loses capacity. For a court appointment, the HSE's How to apply page gives the exact wording to put in the capacity application so the order covers the loan.

The loan is repaid to the Revenue Commissioners, not the HSE. Repayment is due:

• after the death of the person in care
• if the property is sold or transferred. Tell the nursing homes support office within 10 working days.
• if you or your partner are declared bankrupt
• if false information was given in the application

You can also choose to repay all or part of it at any time.

By law, the amount repaid is adjusted in line with the Consumer Price Index (CPI) published by the Central Statistics Office, up to the day it is repaid. If prices rise, the amount you owe rises with them, and if they fall it falls. The HSE calculates the adjustment for each year of the loan.

Interest only applies if repayment is late

• After a death, the loan must be repaid within 18 months. Interest is added from the date of death if it isn't.
• If the property is sold or transferred while the person is still in care, the loan must be repaid within 6 months. Interest is charged from 6 months after the sale.

If the loan was secured on the person's main home, repayment can be put off (deferred) for someone still living there. The house must have been the person's only residence, they must have lived there for at least 3 years before applying for the loan, and they must have no interest in any other property.

A spouse or partner can apply to defer repayment. So can a "connected person", such as:

• a child under 21, or a child or sibling whose own assets are no more than €36,000
• a relative getting a disability or similar allowance, Blind Pension or State Pension (Non-Contributory), or whose income is no more than the State Pension (Contributory)
• a relative who owns a building attached to the home, such as a granny flat
• a carer who looked after the person before they went into care, for example someone who got Carer's Allowance

A deferred loan is still adjusted for inflation, and it must be repaid if circumstances change, for example if the house is sold or the person no longer lives there. The HSE's Nursing home loan page has the deferral form and the contact details for the deferral office in Tullamore.

The loan suits families who:

• own a home but have little cash, so couldn't otherwise pay the 7.5% based on it
• want to keep the house, for example because a spouse still lives there or the family plans to keep it

If there are enough savings to cover the contribution, or the house will be sold anyway, paying directly avoids the inflation adjustment. Either way, apply for the loan when you apply for Fair Deal. It takes months to arrange, and you don't have to accept it.