If you have one of these you ought to be aware of the following:-
Since the mid 2000’s a number of New Home developers offered shared equity schemes (SEM’s), which meant the developer lent you a percentage of the value of the new home, typically 15%-40% max, normally for a 10-year period. At the end of this term the percentage owed to your builder, contractually must be repaid, based on the current value. For many it was a great way to get on the property ladder and a number of lenders regarded the shared equity as an element of deposit, allowing them to offer better rates.
Now we have got to the stage where these shared equity loans are due for repayment and as most of the developers had no experience of this type of funding arrangement, and would rather back out of them, a lot of loans were sold on or discounted to fund management businesses as an investment vehicle. The fund managers have a duty of care to realise the best return for their investors and this can sometimes lead to a fractured negotiation between the fund owner and the property owner, especially if the property has decreased in value, which has happened. They are also very keen to realise their profit on the discounted acquisitions, as quickly as possible. Which adds a degree of pressure to the situation.
We have vast experience in this market having helped hundreds of homeowners keep their home and repay these shared equity loans. We have developed excellent relationships with the owners of these funds and work with our clients and the fund management businesses to achieve a satisfactory outcome for both parties. Even when the price of the property has dropped, we are still there to help our clients through and negotiate a way forward for the future.
There are many ways to get a satisfactory outcome, whether that’s a straight re-mortgage, a second charge loan or even negotiating a better rate with your current lender to reduce your monthly payment to allow a regular payment to reduce the shared equity loan element. All options are explored and explained. In some cases the builders themselves may still retain the equity share loan, but the situation is the same, at some time you, the home owner, must repay the equity share loan to the builder or fund manager or sell up. There is no other choice, it can’t be ignored, as many have found out.
If you have a shared equity mortgage, call us now. It’s never too early to look at how to make certain your home remains yours.