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 Mortgage equity question and eligibility for a TD
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Ccglasgow
Just Joined

2 Posts

Posted - 08 January 2022 :  23:26:34  Show Profile  Reply with Quote
Hi.

I'm looking in to applying for a trust deed. I think my case is not as straightforward as some as I'm self employed/ am a director of a Ltd company. Currently now in a bad financial situation due to the downturn of my business and being pregnant and having a toddler while my partner is now also unemployed. I'm paying myself part time wages (not much) and have just received universal credit for 1st time.

I have a mortgage which is also a help to buy mortgage. The property was purchased for 175k in 2018 by myself. My partner had bad credit from a while before this due to ignoring a credit card when he was younger so I was advised to apply on my own. He's not named on the mortgage but has contributed to the share of bills since we moved in and helped with the original costs of purchasing. So deposit wise I think we paid about 16.5k so I could get the mortgage on my own and the help to buy paid 15% on top of this which was around 26.5k. So the mortgage to begin with was 132k it's now been paid off down to around 122k if I remember correctly.

No idea of the current value but zooplankton estimate says 177k. This could be completely off though.

All of our debts we racked up since moving in to the house total around 28k and are all in my name. So I'd be applying for the Trust deed myself.

My question is would I be eligible? As I'm a company director and would my mortgage equity be classed as just mines as my partners names not on the mortgage?

My partner may be coming in to some inheritance and we would like him to be able to use this money to start up his own business. But we could of course use it to pay towards debts but our income would still be stuck where is it. My head is just pickled right now and going round in circles. I'd originally thought there was no way I'd go for a trust deed but the way our incomes going I feel I need to. Heard many good things since reading up on it today for the 1st time and thought this could be the answer to our problems but now I'm not even sure I'd be eligible.

TDA (Debt Adviser)
Trust Deed Expert



13967 Posts

Posted - 09 January 2022 :  13:59:37  Show Profile  Reply with Quote
Welcome to the trust deed forum Ccglasgow.

You are correct that your case isn't straightforward but that isn't necessarily a problem in itself. Not all trust deed providers work with the self-employed and/or company directors, so if you decide to get direct personal advice you'll probably want to avoid the big callcentre advice services and instead deal with someone pretty senior at a smaller and more specialist provider.

It is possible to enter a trust deed and remain a company director, though there may be some administrative steps to take in advance of actually signing a trust deed.

I'm slightly confused about the nature of the ownership of your home and hopefully you can clarify this for us so we can advise you further. Are you saying that it's a shared ownership property and that you own 85% of it? Please let us know and we can advise you further on this topic. This is a key issue as the relationship between the amount of equity you personally own in the property, and the amount of unsecured debt that you have, could be important here.

Do you think you would be able to afford a regular contribution into your trust deed (from your reduced income) after having covered all of your household bills and expenses?

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

2 Posts

Posted - 09 January 2022 :  14:16:20  Show Profile  Reply with Quote
Hi.

Thanks so much for your reply.

Yes the government own 15% of the property. I'm not sure if my partner would be entitled to a percentage of the equity too though as he's been contributing but his names never been on the mortgage due to myself being the main earner and him having had bad credit at the time.

I would be able to pay a regular contribution yes. I'll be going on to maternity allowance soon which would roughly equal the amount I pay myself right now.
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TDA (Debt Adviser)
Trust Deed Expert



13967 Posts

Posted - 09 January 2022 :  14:27:44  Show Profile  Reply with Quote
Hi Ccglasgow,

I suspect a trustee would only look at the legal ownership status of a property in these circumstances when calculating equity.

You mention that your partner isn't on the mortgage. Home ownership and being named on the mortgage aren't necessarily the same thing. In terms of the actual legal purchase of the property, I presume you were the sole purchaser (rather than both of you)?

Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds    
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Kevin Mapstone
Trust Deed Expert



4111 Posts

Posted - 10 January 2022 :  10:18:20  Show Profile  Reply with Quote
Hi Ccglasgow.

The fact that you are director of a Ltd Company shouldn't be a major obstacle to entering a Trust Deed, though as TDA has said you may need to make an adjustment to the articles of association of the company first.

The property scenario is also relatively straightforward. If you are legally the sole owner of the property then the equity would all be attributable to you (other than the 15% share due to the Help to Buy scheme), regardless of your partner's contributions to the mortgage payments. This in itself is not necessarily a problem, though whether a Trust Deed can be justified would depend on the exact figures and how much might be available to be paid in. This is something that it would probably be easier to advise about directly rather than via the forum, as there may be various permutations. You can just click through the "contact me" button if you would like us to have a closer look at what might be possible.

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