keyworker mortgage nightmare!

sarahsaucepot

Hello
I am new to this site and forum so bear with me!
I am very stressed at the moment because I feel stuck in the property I am living in and it's getting a bit small with a toddler, partner, cat and only one bedroom. I bought my conversion flat in 2007 on a keyworker loan scheme (I am a teacher) through Tower Homes in London (now LQ Group I think); the scheme involves the buyer being loaned 12.5% and another 12.5% as an interest free loan from the mortgage company. I paid £183500 and the flat is probably now worth about £160000 on a good day so we are already in negative equity.
When I first bought into the scheme I was under the impression that I could transfer to a larger property if necessary and take the mortgage with me, however, LQ state that this is not now possible as the scheme I bought under does not exist anymore.
I spoke to Yorkshire bank, who I have my mortgage with, who said the same thing and explained that I would have to sell my property and start again, thus making the whole keyworker scheme pointless as it was sold as getting professional people on the housing ladder. We have no savings, our property hasn't made any money and we owe a proportion of whatever its sold for anyway.
Does anyone else have a similar problem or does anyone have any advice for me? We have been here nearly 5 years and our little girl is almost 2 and it's getting a little claustrophobic here!
I am getting quite down about it all and although I should see a financial advisor I am concerned as to how much that would cost - also, a lot of people don'e seem to know much about this scheme. Any advice would be really greatly appreciated.
Thanks so much.

Thrugelmir

The first issues you need to address are the lack of savings and/or repaying your existing debt quicker.

Rising property prices wouldn't have helped you move up the ladder.

How much do you currently owe on the mortgage?

SB60

Hi,

I bought my first property with Tower Homes Limited under the now defunct homebuyer scheme. I am now looking to remortgage or sell. Tower Homes are on my property deeds but I have no financial agreement with them about paying the loan back and have never received any correspondence since the money was lent.

I have researched TH on the Internet and see that another company has taken over- L&Q. However, I have never been notified of this. I have contacted them and they have no record of my property.

How is it that a company can take over a finance agreement but not inform me? I need to find out where I stand as I have found a new property and am in danger of losing it.

If anyone could advise how I go about getting rid of the loan or transferring it.

Many thanks

penguin12345

SB60, I'm in the same position as you wanting to sell my flat that Tower/LQ seem to have no record of. They have never communicated with me to inform me of the changes and I have only just found out that the scheme is defunct from Google searches. I can't understand how this can be. Did you have any luck getting hold of information?

AnniF

Hi Sarahsaucepot,
I am in a similar situation, except I am no longer a teacher, am single and too old to qualify for another mortgage that would be affordable (I'm almost 58). I bought my conversion flat in 2006 through the key worker scheme when I was still working in the educational sector. Because I was 52 at the time, and was penniless after a gruelling divorce, they kindly fronted 20% of the mortgage for me. My understanding is that if I sell the flat, I must pay 20% of the selling price to the scheme. However, I have not a clue who took over these contracts when the scheme went out of business.

Like you, my flat went into serious negative equity for a while during the market crash, but it has recently recovered and is now valued at just a bit above what I paid for it in 2006 (I paid £94,000 and it is worth about £95,000). I would also like to move to be closer to my daughter's family, especially as they are planning on having a 2nd child soon. The only way I can see around this is to fix up my flat to rent out, and then rent another property somewhere else. I'm just trying to sort out whether what I can get for the rent will cover enough for me to live elsewhere. My mortgage interest is really low, as I took out a lifetime tracker mortgage, and I'm paying 0.5% above base rate. Still, because it was only a 17 year mortgage (owing to my age), my monthly payments are around £400 plus £30 monthly maintenance to our shared freehold company. I do have somewhere around £25,000 in equity in the property now, which would be a great down payment for a new place, but at age 58, my mortgage options are very limited, so I'm not thinking to go that route.

I've been checking into what local 1 bedroom flats rent for here, and the upper end of them rent for about £550, which means I might just be able to squeeze enough from renting my flat out to afford living in another town. It would cost me a bit more to live elsewhere, but my hope is I can find a place with more living space and easier access to my family that would be worth the extra expense. In the meantime, I am protecting my investment in the original property.

Not sure if that's an option for you, but it makes no sense whatsoever to sell your proprty if a) you're in negative equity and b) you'll have to pay a chunk of it to someone esle.

I've also taken out a life assurance policy to pay out against the mortgage should I die before it's paid, so my daughter will actually inherit the place. It's a non-decreasing policy (or whatever they call it) which means if I can get the mortgage down another £18k, it will also cover the original loan to the key worker sheme, should that be necessary.

This is just my 'plan' for now. I haven't actualised it yet because my kitchen needs some serious refitting before this flat is rentable. I'd love to have other people's opinions as to whether or not this seems like a good way to handle the situation.

Anni

Nmjones22

I am in a similar situation with tower, has anyone had any luck getting through to them or selling their property. Please let me know how you got on

Nmjones22

How did you get on with tower in the end?

vavere1

Does this mean that, if we bought with Tower Homes, that if we sell our home we do not need to pay them back, because they no longer exist?

Westminster

I doubt it - I am sure someone somewhere purchased the assets of Tower (which include any agreements they had for equity loans etc).

Although I have no idea how such claims are registered so will be interesting to see what someone more knowledgeable has to say.

blues

if only! L&Q have taken over from Tower Homes. I bought my flat in 2005 through Tower Homes and sold last year. I had to pay L&Q the money owed.

cns06

If they have a charge on the property then yes you pay them. You may not have any documents etc but your solicitor will have put their interest in the property on the land registry etc.


TBH the above is exactly my concern with the current HTB scheme. It all seems good now but in 10 years time there are going be a *lot* of folks out there who want to move but they owe 20% of the *value* of the property to a 3rd party. Its going to (imho) wipe out any growth and people are going to end up back at square 1. Their mortgage is on a high rate too, so they wont have made huge impact on the advance figure - just seems good now but not in 10 years. Its ok for people who may progress up the ladder in their job but someone on HTB now with no savings for a deposit still probably wont have much savings in 10 years. Hey ho!