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Home appreciation loans from the council seem to be a bad idea.
Home appreciation loans from the council seem to be a bad idea.
If you are thinking of borrowing money in this way for your home improvements please think very carefully before you sign up.
My grandson took out a Home appreciation loan via his local Council 9 years ago. He borrowed £10.000
He was given to understand that if he sold his house he would have to pay the money back plus an average of 2% interest.
He recently sold his house and completed the sale today.
He was gob smacked to see that he had been charged £19,041.75 to repay the £10,000 he originally borrowed
It obviously works the same as an equity release loan. This was not explained properly when he borrowed the money.
If you are thinking of borrowing money in this way for your home improvements please think very carefully before you sign up.
My grandson took out a Home appreciation loan via his local Council 9 years ago. He borrowed £10.000
He was given to understand that if he sold his house he would have to pay the money back plus an average of 2% interest.
He recently sold his house and completed the sale today.
He was gob smacked to see that he had been charged £19,041.75 to repay the £10,000 he originally borrowed
It obviously works the same as an equity release loan. This was not explained properly when he borrowed the money.
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Comments
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It seems he didn't read the terms correctly, as Home Appreciation Loans work exactly as the name suggests, with the repayment being based on the value of the home at sale.
No one will offer an open-ended 2% loan with no repayments.
It may not have been a wise decision to take out the loan, but perhaps he had no other option.2 -
He couldn't afford the essential repairs at the time but didn't realise what he was signing up to.
Very sad as it has cost him more that 50% of the profit on his sale.0 -
Jolly212 said:He couldn't afford the essential repairs at the time but didn't realise what he was signing up to.
Very sad as it has cost him more that 50% of the profit on his sale.
If the work was essential and couldn't afford the repairs it seems like he had little choice anyway.1 -
These loans are for people on who cannot raise money from commercial lenders to make essential repairs / improvements. Had he not taken out the loan he would not have been able to carry out the work and he would have spent the last 9 years living in sub standard accommodation.Had the work not been carried out the amount he sold the house for would have probable been lower than he got with the work, so the loan will have contributed to his profit, so it is not fare to say it has cost him half the profit.
Does not seem such a bad idea to me.1 -
Sounds like an excellent scheme to me.
What would he have paid back if the house sold for no profit ?0 -
Jolly212 said:He couldn't afford the essential repairs at the time but didn't realise what he was signing up to.
Very sad as it has cost him more that 50% of the profit on his sale.0 -
So he has paid back about 7% annual interest and no monthly payments. Going a commercial loan route could easily have cost that, or more.
But a banker, engaged at enormous expense,Had the whole of their cash in his care.
Lewis Carroll0 -
superbigal said:Sounds like an excellent scheme to me.
What would he have paid back if the house sold for no profit ?When you repay the loan, we’ll carry out a new valuation of your home.This valuation will be used to work out the amount of loan you will payback. Normally, the amount you pay back will be the lower of• the percentage we worked out when you first took the loan, but ofthe new value of your home.• The original loan amount plus a fixed limit by which the repaymentvalue of your loan grows. This limit is to protect you againstexceptional increases in property prices.If your property falls in value you will not be asked to pay back morethan you borrowed from usIf the full repayment will cause you extreme financial problems we mayreduce this amount.We have a no negative equity guarantee. This means that you or yourbeneficiaries will not have to repay more than your home is worth.0 -
All the valuations used seem to work in favour of the person taking out the loan, excellent scheme making essential repairs affordable.
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