Frequently Asked Questions
We understand that you will have a thousand questions at this point - here are a selection of the most popular and the answers.
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General Questions
Sale & Rentbacks
A Quick Sale
I.V.A.'s
Remortgages & Secured Loans
Divorce & Separation
All other Questions
What is the Homeowners Advice Centre?
We
are an organisation set up by a group of property
professionals who wanted to provide free advice to
homeowners in distress. We were incorporated in May 2005
and have helped numerous homeowners restructure their
debts, sell their houses fast and avoid repossession.
Back to list of questions...
How do you make your money?
We only make
money if we provide you with a solution that you later
follow through on. Therefore it is in our interests to
ensure that the solutions we provide for you are viable
and genuinely benefit you. You never pay us a fee -
ever!
Back to list of questions...
What happens if we do not follow your
recommendations? Will you charge us?
NO! It
doesn't matter how long we spend with you, or how long
we spend researching your solutions, we never ever
charge you a penny. Even if you don't go ahead with our
recommendation! We already know that out of every 10
people we go and see, statistically there are 2 people
that will not follow up on any of the solutions,
regardless of the amount of work we put in, so we have
already written off that time. You might be one of those
2 clients we cannot help!
Back to list of questions...
Sale & Rentbacks
What is a Sale And Rentback?
A Sale and
Rentback programme helps homeowners who cannot get
further credit (due to arrears, credit history or income
levels) to restructure their debts by selling their home
to us, and arranging to rent it from us until they can
buy it back. You have no obligation to buy your home
back, but as standard we always write a clause saying we
cannot sell the home unless you give us written
authorisation. This means that you are always in
control, and will always get first refusal on your house
at the end of your tenancy agreement.
Back to list of questions...
Do I have to rent it back?
No. Not at all.
Some of our clients like to sell it to us, live in it
for a year then move out. In which case, we will split
the profit from the house sale once you move out with
you, meaning you get 2 pots of money - One when you sell
to us and one when we sell on your house. Of course, we
are very flexible, and can structure the deal however
you want it. We can arrange to pass the profits on to
your children, making inheritance tax planning easier.
Back to list of questions...
Can I just make a straight sale of my house to
you?
Yes. We arrange to buy houses from clients all the
time. However, and this is true of all "Cash Paid Now"
companies, you will achieve a higher price if you were
to put it on the open market and wait for it to sell.
Back to list of questions...
How much will you pay for my house?
We generally pay between 60% and 80% of the house value
dependant on your circumstances, and the number of years
you want to stay there (we also can split the profit if
we sell the house after you have left with you, often
bringing the total amount payable to you to 100%). The
house is valued by an INDEPENDENT valuer and we have no
control over the valuer's survey. You are likely to make
more if you put the house on the open market and wait
for it to sell. We also offer a scheme where we pay 60%
of the value today and 40% at the end of the tenancy
which means you will achieve 100% of today’s value.
Back to list of questions...
Who values my house? Is it you?
We request
an independent RICS (Royal
Institute of Chartered Surveyors) valuer to value
your house, and we have no control over his/her
valuation. Almost every house bought with a mortgage is valued
this way and a RICS Valuer is notoriously fair with
house values, so we know, and you know that the value
he assesses is likely to be within 1% of the true resale
value at that time. In fact he is that strict that we
could not influence his decision in any way even if we
wanted to, without him (& us) going to prison for fraud!
Back to list of questions...
What happens if I don't want to buy the house at
the end of the tenancy term?
In the last 60
days of your tenancy agreement, our legal team will
write to you to ask you if you want to buy the house. At
this time you may do one of 4 things.
1) You can say you do not want to buy the house and move
out at the end of the 60 days owing nothing.
2) You can re-negotiate with us to stay for another
tenancy term (anything from 1 year to 25 years) and
create a fresh option to buy agreement
3) You can buy the house from us at the pre-agreed
price.
4) You can continue to rent from us, but we can set
aside a portion of your rent to go towards paying off
the house. It works out just like a mortgage, but
without any credit checks or deposits required.
Back to list of questions...
Who sets the Buy-back price?
The buy-back
price is set at the beginning of the term and does not
change, regardless of house prices. It is adjusted for Retail
Price Index (RPI) inflation, but if it does not
matter if your house is worth £50,000 at the end of
the term - if we have agreed to sell it for £100,000
we will sell it for £100,000 (adjusted for RPI inflation)
Back to list of questions...
What happens if I want to move out before the end
of the term?
You can give us one month's
notice and move out at any time, owing nothing. We will
return your security deposit (subject to the house being
free of damage), however you will lose the option to
buy. This is also true if you stop paying your rent.
Back to list of questions...
Can you terminate our tenancy agreement?
We
can only terminate your tenancy or evict you if you do
not pay your rent. If you think you might be a few days
late with your rent, then it is always better to tell us
up front so we can do something about it.
Back to list of questions...
I.V.A.'s
What is an I.V.A?
An I.V.A.
(Individual Voluntary Agreement) is a legal
arrangement to pay your debts over a specified period of
time (usually 5 years) at a specified amount per month.
Usually, whatever is not repaid at the end of the 5
year term is written off. That is why some debtors
(people who owe money) end up paying just 30% of the
amount they owed in the first place.
Back to list of questions...
Am I eligible for an I.V.A.?
Maybe.
Call us today and we can assess your situation. If you
are not, we have a variety of other programmes that may
help you.
Back to list of questions...
Will I lose my house?
Most I.V.A.'s are set
up to ensure that you keep your house. You may be
required to release a little bit of equity in the
penultimate year, but only if it is agreed that you can
afford to.
Back to list of questions...
Will my creditors stop harassing me?
Yes.
Creditors are not legally allowed to pursue you for your
debt once an I.V.A. has been approved. This includes
Bailiffs.
Back to list of questions...
Can I set up my own I.V.A?
An I.V.A. has to
be administered by an experienced Debt Counsellor and
supervised and approved by an Insolvency Practitioner (I.P.).
Therefore, unless you know an I.P. then you must use a
reputable organisation. Beware: The most reputable
companies are
not always the ones spending the most on TV adverts!!!
Back to list of questions...
What is the difference between an I.V.A. and
bankruptcy?
In bankruptcy, the Official Receiver
(the equivalent of the I.P. in bankruptcy terms) takes
charge of all of your assets (houses, pension, shares,
investments, companies etc) and will often force a sale
of as much as he or she can, to release money to pay
your creditors (people you owe money to). You are likely
to lose your home at some point, and your name is
published in the paper. You also need to notify
everyone you do business with that you are an
undischarged bankrupt, and you are forbidden from
attaining
more than £500 in credit without disclosing that you
are bankrupt. Also, your credit record will show your
bankruptcy for 6 years, and you will often be turned
down for a mortgage if you have, at some stage, been made
bankrupt.
Back to list of questions...
How long does an I.V.A take to put together?
I am getting threatening calls from my creditors now!
Typically an I.V.A.
takes up to 8 weeks, but if you are at risk of losing
assets now due to repossession or other legal action,
you
can organise for an Interim Order which is a court order
forcing your creditors (who you owe money to) to wait
until your I.V.A. proposals are completed, before
they can attempt legal action again.
Back to list of questions...
Is a I.V.A, right for me?
Maybe. We spend a
lot of time with you (either face to face, or over the
'phone depending on your preference) looking at all of
the options, and although about 25% to 50% of our
clients choose an I.V.A. we encourage you to think long
and hard before making your decision. It is a big step,
and it is a legally binding agreement that also will
adversely affect your credit score. A Sale & Rentback,
for example will NOT affect your credit score, and in
some cases will help repair it.
Back to list of questions...
Will an I.V.A. affect my credit rating?
Usually it does. It may not stop you getting credit for
your business if you need to buy supplies etc., but you
need the permission of the I.P. before you can apply for
further consumer credit such as overdrafts, loans or
credit cards, unless you have exited the programme, or
repaid your debts early.
Back to list of questions...
Remortgages & Secured Loans
What is the difference between a remortgage & a
Secured Loan?
A remortgage is when you take out a
new mortgage from (usually) a different lender who is
offering a lower interest rate or better terms.
Sometimes, you remortgage to release equity from your
house - this is where your new lender will lend you more
than the outstanding amount of your current mortgage -
you can keep the difference to spend on whatever you
want. A secured loan is a loan taken out that is
secured on your house. The repayments on a secured loan
are often higher than a remortgage, but the amount
repaid can be less. as a secured loan is often spread
over fewer years than a mortgage.
Back to list of questions...
Which is easier to arrange? A secured loan or a
remortgage?
It depends. Often a secured loan is easier to
arrange, but can have higher arrangement fees and admin. A
remortgage typically requires a solicitor (around £400)
and a new valuation (around £300) to set up in addition
to the broker fee (often £595) and arrangement fee (can
be up to 3%). However you have the option of choosing
to pay interest only, which you usually do not have if
you take out a secured loan (see next question)
Back to list of questions...
What is the difference between 'interest only' & a
repayment mortgage?
An interest only mortgage
means you repay ONLY the interest on the amount
borrowed, rather than the interest PLUS the amount
borrowed (called the 'principle'). This means monthly
payments on your interest only mortgage can be almost
half those of your repayment
mortgage, however at the end of the
term, you will still owe exactly the same amount as when
you started. It is advisable to set up a separate
investment (such as a stock market fund) to pay into
each month, which, at the end of the term, can be used
to re-pay your lender the original amount borrowed.
Otherwise you may be forced to sell your home, or take
out another mortgage. However,
some homeowners are now choosing to switch to interest
only mortgages for a few years in order to reduce their
monthly outgoings and prioritise
repaying other debts, and then switching back to
repayment at a later date.
Back to list of questions...
How long does a re-mortgage or secured loan take?
Often both can be arranged within 14 days. It does
depend on how quickly you can send back the paperwork
and how complex the case. If you are considering
changing mortgages, it is a good idea to request a
'Redemption Figure' today as your lender often takes 5
to 10 working days to send this through by post. You
will rarely get this over the 'phone, and it is worth
confirming that you will not be charged for requesting
it.
Back to list of questions...
When
is it not right to change mortgages?
As you may have guessed, mortgages are a lucrative
business, and lenders will offer tempting incentives to
choose their loan over their competitors, such as free valuations,
free legals or cash-back. Obviously, these are not
really free, as the mortgage company is banking on you
staying with them for a number of years and often these
loans are fractionally higher than their competitors to
cover the 'free' stuff! Another increasingly common
practice is to apply an 'early repayment penalty' (also
known as a 'redemption penalty') which can
be as much as 5% of the loan. Be careful to calculate
your penalty before switching, as the proposed savings
from the new lender may not justify paying this penalty.
PLEASE NOTE: This is not the same as the redemption fee,
which most lenders charge for repaying your mortgage
regardless of how long you have had it. It is often
around £299, but can be much higher. This is an 'admin
fee' that your lender charge for redeeming the mortgage.
Back to list of questions...
How do I choose
a lender?
It is always difficult to choose which lender to use for
your new mortgage, as there are over 600 lender to
choose from, and each will probably have over 50
different mortgages, so it can be minefield. As a rough
rule of thumb, if you have good credit, and are
borrowing a low Loan to Value (LTV) percentage (for
example, by borrowing 60,000 on a house worth £100,000
your LTV is 60%) then you will have the most choice, and
therefore the best rates. However, if you had had
arrears on credit agreements, and want to borrow 90% of
the value of your house (90% LTV), then you may well
have fewer options and higher rates. Most 'cashback'
offers are reflected in a slightly higher monthly
repayment rate. Your grandmother was right... there is
no such thing as a free lunch!
Back to list of questions...
What fees should I pay when I arrange my mortgage?
There are a number of fees to pay when you switch
lenders or take out a new mortgage. You pay three sets
of people:
1) Lender. The lender will sometimes add fees such as
Higher Lending Charge (if, perhaps, your
LTV
is over 90%). This should be explained to you when you
get the Key Facts Illustration (like a mortgage
quotation)
2) Broker. Your broker will do all of the paperwork &
research necessary to source and apply for your loan.
He/she will usually charge an admin fee of around £195
payable up-front and an arrangement fee which can be
added to the loan. Typically these are around 2-3%.
A good broker will refund the admin fee if he/she cannot
find you a mortgage.
3) Surveyor/Valuers & Legal fees. You may be charged
for a valuation of your house, and you will need a
solicitor to oversee the transaction. These are often
extra fees.
Please ask your broker for a full breakdown of the
fees before agreeing to the loan/mortgage.
Back to list of questions...
Divorce & Separation
How can I buy my partner out?
We can often
put into place a Sale & Rentback programme where we pay
your estranged partner half of the equity in the home
now, in exchange for a lifting of the Equitable Charge
on your property. You would then rent back from us in
the normal way. with an option to buy anything form 10
to 100% back at a later date.
Back to list of questions...
What happens if I can't afford to buy my home back?
We can offer you as little as 10% of your home to buy
back at the end of the term, and you can buy further
shares as and when you are able to. In fact, it is in
our interest for you do this as we end up with a tenant
who looks after the house over a longer term.
Back to list of questions...
What about my children & their school?
In
the Sale & Rentback scenario, you can stay in the house
for as long as you want and never have to move the
children out of school.
Back to list of questions...
What is a Sale And Rentback?
A sale and
Rentback programme helps homeowners who cannot get
further credit (due to arrears, credit history or income
levels), or need to release a large amount of equity
(for example to pay out a partner) to restructure their debts by selling
their home
to us, and arranging to rent it from us until they can
buy it back. We then hold the house 'in trust', freezing
the buyback price until the end of the term. You have no obligation to buy your home
back, but as standard we always write a clause saying we
cannot sell the home unless you give us written
authorisation. This means that you are always in
control, and will always get first refusal on your house
at the end of your tenancy agreement.
Back to list of questions...
Do I have to rent it back?
No. Not at all.
Some of our clients like to sell it to us, live in it
for a year then move out. In which case, we will split
the profit from the house sale once you move out with
you, meaning you get 2 pots of money - One when you sell
to us and one when we sell on your house. Of course, we
are very flexible, and can structure the deal however
you want it. We can arrange to pass the profits on to
your children, making inheritance tax planning easier.
Back to list of questions...
Can I just make a straight sale of my house to
you?
Yes. We buy houses form clients all the
time. However, and this is true of all "Cash Paid Now"
companies, you will achieve a higher price if you were
to put it on the open market and wait for it to sell.
Back to list of questions...
How much will you pay for my house?
We
generally pay between 60% and 80% of the house value
dependant on the circumstances. The house is valued by
an INDEPENDENT valuer and we have no control over this valuer's survey. You are likely to make more if you put
the house on the open market and wait for it to sell.
However, we can offer a profit split when we sell the
house on, and if this sale is scheduled for 5 years
time, then you may end up making more on the house than
if you sold it for full market value today.
Back to list of questions...
Who values my house? Is it
you?
We request
an independent RICS (Royal
Institute of Chartered Surveyors) valuer to value
your house, and we have no control over his/her
valuation. Almost every house bought with a mortgage is valued
this way and a RICS Valuer is notoriously fair with
house values, so we know, and you know that the value
he assesses is likely to be within 1% of the true resale
value at that time. In fact he is that strict that we
could not influence his decision in any way even if we
wanted to, without him (& us) going to prison for fraud!
Back to list of questions...
What happens if I don't want to buy the house at
the end of the tenancy term?
in the last 60 days
of your tenancy agreement, our legal team will write to
you to ask you if you want to buy the house. At this
time you may do one of 3 things.
1) You can say you do not want to buy the house and
move out at the end of the 60 days owing nothing.
2) You can re-negotiate with us to stay for another
tenancy term (anything from 1 year to 25 years) and
postpone your option to buy
3) You can buy the house from us at the pre-agreed
price.
Back to list of questions...
Who sets the Buy-back
price?
The buy-back
price is set at the beginning of the term and does not
change, regardless of house prices. It is adjusted for Retail
Price Index inflation, but if it does not
matter if your house is worth £50,000 at the end of
the term - if we have agreed to sell it for £100,000
we will sell it for £100,000 (adjusted for RPI inflation)
Back to list of questions...
What happens if I want to move out before the end
of the term?
The buy-back
price is set at the beginning of the term and does not
change, regardless of house prices. It is adjusted for Retail
Price Index inflation, but if it does not
matter if your house is worth £50,000 at the end of
the term - if we have agreed to sell it for £100,000
we will sell it for £100,000 (adjusted for RPI inflation)
Back to list of questions...
Can you terminate our tenancy agreement?
We
can only terminate your tenancy or evict you if you do
not pay your rent. If you think you might be a few days
late with your rent, then it is always better to tell us
up front so we can do something about it.
Back to list of questions...
What would you like to do now? Choose from the
following list.
Remember - we never charge you a fee
- we make our money from your successful solution.
*We will pay you £50 in cash
if can't provide you with a viable solution within 30
days.
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