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SH1589
Contributor

8 Posts

Posted - 21 October 2020 :  20:15:11  Show Profile  Reply with Quote
Hi, I am new to this forum. I am just about to sign my forms for a trust deed. I recently just bought a house, 5 months ago, I am in a 5 year fixed rate, what happens when the 5 years is up and i come to renew my mortgage, will I have an issue doing so? Any advice will help.

TDA (Debt Adviser)
Trust Deed Expert



13542 Posts

Posted - 21 October 2020 :  22:20:18  Show Profile  Reply with Quote
Welcome to the trust deed forum SH1589.

Iím assuming your trust deed is due to run for 4 years in this answer. Please let us know if it will be longer.

Thereís 3 potential outcomes here:

1 - You remortgage with a new lender. This is highly unlikely to happen based upon current lending criteria (though that could change in the future). Most lenders wonít consider an application unless youíve been discharged for at least a couple of years.

2 - Your existing lender offers you a replacement deal, for example a new 5 year fixed rate. Replacement deals are common but not guaranteed.

3 - You move onto your existing lenders standard variable rate, which could be lower or higher than your current deal.

Itís easier to work with your current lender because, unless youíre trying to increase your current mortgage, theyíre not taking on any extra risk over and above the risk they already have.

I hope this helps? Do you have any other questions before you Ďsign on the dotted lineí?!

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SH1589
Contributor

8 Posts

Posted - 22 October 2020 :  10:01:59  Show Profile  Reply with Quote
Hi, Thanks for the reply.

My term will be 5 years, a 1 year extension to cover my equity and car that I have. As long as my property is safe I am ready to sign on the dotted line. I have had plenty assurance that it will be as long as you keep up with Trust deed payments and mortgage payments, but that wonít be an issue.
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TDA (Debt Adviser)
Trust Deed Expert



13542 Posts

Posted - 22 October 2020 :  11:48:55  Show Profile  Reply with Quote
Hi SH1589,

That's good to hear.

There should be a written agreement in advance of signing which clarifies how your assets will be dealt with. It sounds like that's what you have with the outcome being an extra year added to the minimum four year term.

As you say, if you keep up the trust deed and mortgage payments there shouldn't be any issues down the line.

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SH1589
Contributor

8 Posts

Posted - 22 October 2020 :  18:44:34  Show Profile  Reply with Quote
Yes thatís the reason why i have the extension, I have a sum of money to be paid by Jan 2026 thatís for the part of the equity plus my car.

So my house should be safe as long as i keep up with payments?

Are there any other reasons from past experience that someone has lost there house during a TD?

Thanks
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TDA (Debt Adviser)
Trust Deed Expert



13542 Posts

Posted - 22 October 2020 :  19:54:23  Show Profile  Reply with Quote
Hi SH1589,

We heard some awful stories on here after the financial crash (2007 to 2008). People had entered trust deeds expecting to be able to remortgage out their equity. This had been possible before the crash, but essentially never has been since.

Lots has changed since then. There has to be a written agreement about how equity will be dealt with before you go ahead. Everyone knows that a remortgage isn't going to be a viable option to deal with the equity, so extended payments or a 3rd party contribution are common agreed solutions.

The two basic risks are:

1 - You do not, or cannot, pay your mortgage and the lender takes back possession.

2 - Your trust deed fails and you get made bankrupt. This isn't especially common in the event of a trust deed failing, but is more likely to happen if someone fails to cooperate with their trustee's reasonable requests or engages in some other type of misconduct.

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SH1589
Contributor

8 Posts

Posted - 22 October 2020 :  20:15:47  Show Profile  Reply with Quote
Thanks again, thatís reassured me a lot. So basically, donít miss mortgage payments or Trust deed payments and comply with the rules set out by your trustee and all will be straight forward. Thanks.
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TDA (Debt Adviser)
Trust Deed Expert



13542 Posts

Posted - 22 October 2020 :  22:05:13  Show Profile  Reply with Quote
No problem SH1589.

There are many reasons why homeowners will have extra concerns about entering a protected trust deed. You've done the right thing by asking questions until you feel comfortable about going ahead.

The reality is that a protected trust deed sometimes allows people, who own assets like a home, to deal with their assets much more flexibly than would be the case with bankruptcy.

Best wishes with everything.

Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds    
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