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I purchased a new build using the government backed HomeBuy Direct scheme in 2010. I was recently divorced having 2 dependent children and only 1 income. This scheme allowed applications from divorcees so I applied and was approved.
70% of the cost was covered by my deposit and repayment mortgage.
The remaining 30% was by way of 2 equity loans, equal ranking second charges, to the Homes & Communities Agency HCA (unregulated) and Persimmons (regulated by the CCA).
The loans have to be repaid within 25 years by “staircasing” in minimum 10% increments, or when the repayment mortgage ends by refinancing or selling the home. The 30% equity loans being based on the prevailing market value.
No interest was due for the first 5 years, but was charged at 1.75% from the start of year 6 and increases by RPI +1% pa.
I am 9 years off retirement and exploring ways to repay the equity but don’t see any way this can happen without selling up, which I really don’t want to do. The original equity loans were worth £77,444. I currently owe c£120k and rising, this is in addition to the balance of my repayment mortgage.
I don’t feel this product was ever fully explained to me. Being partly unregulated I feel I was owed a greater duty of care than if I were entering into 2 regulated contracts.
To clarify I received no independent financial or legal advice prior to entering into these agreements.
In addition, I wasn’t provided with an example/illustration as to the potential repayment amounts. The generic “schedule” I was provided on equity mortgages uses 25% as an equity loan figure throughout, not the 30% applicable to the HomeBuy Direct scheme.
The “Notice to borrower” in both the Persimmons credit agreement and HCA contracts state..
“Full details of the amount you will have to pay back, with examples (including an example tailored to your mortgage figures), will be given to you before you sign this agreement.
I was never provided with such a document – does this affect the legitimacy of the contract/s?
I would appreciate any guidance here please.
70% of the cost was covered by my deposit and repayment mortgage.
The remaining 30% was by way of 2 equity loans, equal ranking second charges, to the Homes & Communities Agency HCA (unregulated) and Persimmons (regulated by the CCA).
The loans have to be repaid within 25 years by “staircasing” in minimum 10% increments, or when the repayment mortgage ends by refinancing or selling the home. The 30% equity loans being based on the prevailing market value.
No interest was due for the first 5 years, but was charged at 1.75% from the start of year 6 and increases by RPI +1% pa.
I am 9 years off retirement and exploring ways to repay the equity but don’t see any way this can happen without selling up, which I really don’t want to do. The original equity loans were worth £77,444. I currently owe c£120k and rising, this is in addition to the balance of my repayment mortgage.
I don’t feel this product was ever fully explained to me. Being partly unregulated I feel I was owed a greater duty of care than if I were entering into 2 regulated contracts.
To clarify I received no independent financial or legal advice prior to entering into these agreements.
In addition, I wasn’t provided with an example/illustration as to the potential repayment amounts. The generic “schedule” I was provided on equity mortgages uses 25% as an equity loan figure throughout, not the 30% applicable to the HomeBuy Direct scheme.
The “Notice to borrower” in both the Persimmons credit agreement and HCA contracts state..
“Full details of the amount you will have to pay back, with examples (including an example tailored to your mortgage figures), will be given to you before you sign this agreement.
I was never provided with such a document – does this affect the legitimacy of the contract/s?
I would appreciate any guidance here please.
