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Running out of money while paying for a care home is one of the most common and most stressful situations families face. The good news is that it does not mean care stops. What it does mean is that the rules change, and understanding those rules in advance makes all the difference.
Updated for 2026, this guide explains what happens when savings run low, what the council will assess, and what your options are at each stage.
Before making any decisions, read our care home funding guide — it covers the means test, self-funding thresholds, deferred payment agreements, and NHS funding options in full.
What Does Self-Funding Mean?
A self-funder is someone who pays their own care home fees because their assets exceed the threshold at which the council is required to contribute. In England, that threshold is currently £23,250.
Self-funding gives you a wider choice of home and makes it easier to secure a place quickly. But with care home fees averaging around £1,300 per week for residential care and £1,512 per week for nursing care in 2026, savings can deplete faster than many families expect. At those rates, annual costs run to approximately £67,600 for residential care and £78,600 for nursing care.
How Quickly Can Savings Run Out?
The honest answer is: faster than most people plan for.
At an average of £1,300 a week, someone entering residential care with £100,000 in savings would cross the upper threshold in under two years, even before accounting for annual fee increases. Most care homes raise fees by 5 to 10 percent each year. Someone in nursing care, at £1,512 a week, would reach the same point even sooner.
For people with dementia or other progressive conditions, care needs, and therefore costs, tend to increase over time. It is worth factoring this in from the start.
"The families who manage this transition most smoothly are the ones who contact us and the council well before the money actually runs out. Once you're in crisis, your choices narrow considerably."
Steps to Take When Savings Are Running Low
1. Request a care needs assessment
Contact your local authority's adult social care team. A care needs assessment establishes what support your loved one requires and is the formal starting point for accessing council funding. You do not need to wait until money has run out.
2. Request a financial assessment
Alongside the needs assessment, the council will carry out a means test. This looks at savings, investments, property, pensions, and other income to determine what contribution you are expected to make.
The key thresholds in England for 2025/26 are:
- Above £23,250: you pay the full cost of care yourself
- Between £14,250 and £23,250: you contribute from assets on a sliding scale (£1 per week for every £250 of capital above £14,250), with the council contributing the remainder
- Below £14,250: your savings are disregarded entirely; you contribute only from income
These thresholds have been frozen since 2010 and were confirmed at the same level for 2025/26 by the Department of Health and Social Care. The proposed £86,000 lifetime cap on care costs has been scrapped by the current government.
3. Understand what the council will and will not fund
If the council becomes responsible for your care, they will pay a standard rate based on what they consider sufficient to meet assessed needs in their area. If your current home charges more than that rate, a shortfall arises. This is known as a top-up fee.
Your Options When Funding Changes
Top-up fees
A top-up fee is the difference between what the council pays and what the care home actually charges. A family member or other third party can agree to pay this voluntarily.
Key points:
- No one is legally obliged to pay a top-up unless they have signed a contract agreeing to do so
- Once signed, that agreement is legally binding
- If top-up payments become unaffordable, your loved one may need to move to a home the council will fund in full
- Before agreeing, think carefully about whether payments are sustainable for the long term
Our guide to care home top-up fees covers this in full detail.
Deferred Payment Agreements
If most of your capital is tied up in property, a Deferred Payment Agreement (DPA) allows the council to pay your care fees on your behalf, secured against the value of your home. You repay when the property is eventually sold, typically after your death.
Key points:
- You do not have to sell your home during your lifetime
- Interest is charged, currently at around 1.75 percent above the Bank of England base rate
- Administrative fees may also apply
- For longer care stays, interest can accumulate significantly
A DPA is not an asset protection tool. The full amount plus interest remains owed to the council. But it removes the immediate pressure to sell and allows the sale to happen at the right time and price.
Moving to a council-funded home
If no top-up arrangement is in place and your current home charges above the council rate, you may need to move. The council is legally required to offer at least one suitable option within their funding rate. For someone living with dementia, an unplanned move can be particularly unsettling, which is why early planning matters so much.
NHS Funding: Two Routes Worth Knowing
NHS Continuing Healthcare
NHS Continuing Healthcare is full NHS funding for people whose primary need is health-related rather than social care. It is not means-tested. If you qualify, the NHS covers all care costs regardless of your assets.
Eligibility is assessed using a national decision support tool. Conditions such as advanced dementia, Parkinson's disease, and complex or unpredictable health needs can make someone eligible, though this varies and assessment is required. Many families are not aware this route exists until it is mentioned by a care home or hospital discharge team.
NHS-Funded Nursing Care
For people in a nursing home who do not qualify for full Continuing Healthcare, NHS-Funded Nursing Care (FNC) provides a weekly contribution towards the nursing element of fees, paid directly by the NHS to the care home.
From 1 April 2026, the standard FNC rate increased to £267.68 per week (up from £254.06), with the enhanced rate rising to £368.24 per week. This is paid regardless of financial circumstances and applies to anyone in a nursing home receiving care from a registered nurse.
Benefits Self-Funders Can Claim
Paying for your own care does not mean you are ineligible for all support. There are benefits self-funders can claim that many families overlook. Attendance Allowance, for example, is not means-tested and can contribute towards fees.
Planning Ahead: What Families Should Do Now
Regular financial reviews are more useful than a single conversation. Calculate monthly care costs, all income sources, the rate at which assets are depleting, and when you expect to cross the threshold. That gives you time to act rather than react.
Professionally qualified independent financial advisers who specialise in later life planning can help with:
- Understanding the transition from self-funding to council support
- Assessing NHS Continuing Healthcare eligibility
- Structuring a Deferred Payment Agreement
- Maximising benefits and entitlements
It is also worth understanding what happens when self-funding runs out in relation to any existing care contracts. Some homes require notice or have specific terms around transitioning to council funding. Check the contract before a change in circumstances occurs.
Frequently Asked Questions
What happens when my money runs out while paying care home fees?Contact your local council as soon as possible and request both a care needs assessment and a financial assessment. If eligible, the council will begin contributing to costs. Depending on the fees your home charges, a top-up arrangement or a move may be needed.
Do I need to sell my home to pay for care?Not necessarily. A Deferred Payment Agreement allows the council to fund your care while taking a legal charge against your property. You repay when it is eventually sold. Your home is also disregarded from the means test if your spouse, a dependent child, or a relative aged 60 or over still lives there.
Are family members legally obliged to pay care home fees?No. Family members have no legal obligation to pay care fees unless they have voluntarily signed a contract agreeing to cover a top-up. That agreement then becomes legally binding.
What is a top-up fee?A top-up fee is the difference between the rate the council will pay and the actual fees charged by the care home. It must be paid by a third party, not by the resident themselves from their personal expenses allowance.
What is NHS-Funded Nursing Care?It is a weekly NHS contribution paid directly to nursing homes for residents who need registered nursing care but do not qualify for full NHS Continuing Healthcare. From April 2026, the standard rate is £267.68 per week.
Will the care home be the same if I move to council funding?That depends on whether the home accepts the council's standard rate. If it does not, and no third party is paying a top-up, a move to a different home may be required. Raising this with the home and the council early gives you the best chance of keeping disruption to a minimum.
How Ashberry Can Help
At Ashberry Care Homes, we talk with families at every stage of the funding journey, including those who are already self-funding and want to understand what happens next. We can explain how fees work across our homes, what the transition to council funding involves, and how to access specialist advice.
Get in touch with our team to talk through your situation. There is no obligation, and understanding your options early is always better than facing them under pressure.
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