6 Applying for the Product

6.1 Initial Application

6.1.1 A homeowner facing repossession will initially be required to be assessed by their local authority that is responsible for determining their eligibility. Homeowners directly contacting providers should be referred to their local authority Housing Advice Department accordingly.  Please see section 3 for applicant eligibility requirements.  The programme is restricted to those applicants whom a local authority would owe a statutory duty to re-house when homeless and it is for the local authority to carry out this initial eligibility check. The local authority will be responsible for informing applicants if they are not eligible for the product.

6.2 Assessment Process

6.2.1 When an applicant has been assessed as eligible, the local authority will refer applicants to a money adviser to provide debt counselling and advice.  For more on the role of money advisers click on the asterisk.  

 

6.2.2 Following suitable money advice The local authority will then forward a referral to the provider.  At this stage the local authority will also notify the applicants’ lender who will freeze additional interest and penalty charges for up to 3 months. It is anticipated that this will be sufficient time to complete the rescue in the majority of cases. The referral must contain the applicant's contact details and current situation and a consent form for personal data to be shared amongst agencies involved in mortgage rescue. The money advice agency will already have determined an affordable monthly payment for the applicant.

6.2.3 In most cases applicants will already understand which option is best suited to their needs.  In cases where providers need to determine which option is best suited to the applicant’s needs, providers are required to use the Mortgage Rescue Product Selection Tool to inform the decision.

6.2.4 Providers should make available information (in plain English) for mortgage rescue applicants.  Click here to access the Plain English Guide.

6.2.5 Where the applicant qualifies for a Shared Equity rescue, the provider will contact the applicant within 5 working days of receipt of referral and how the option works.

6.2.6 Depending on the result of the information contained in the referral the provider may have to query information provided by the applicant or recommend a further session with the money advice agency before the application can proceed.

6.3 Formal Offer and Sales Process

6.3.1 Providing the eligibility criteria for both applicant and property are satisfied and the applicant agrees to the type of rescue recommended, in this case an equity loan, the provider can admit the applicant to the mortgage rescue programme subject to valuation and condition of the property. The provider will arrange for and fund a valuation, undertaking a full valuation of the property at market value.  The valuation must be based on vacant possession.

6.3.2 An independent RICS accredited valuer must carry out the valuation.  The provider must satisfy themselves that the home does not contain any category 1 hazards.  Please see the guidance box in section 5 for the definition of the HHSRS.

6.3.3 The valuer will be accompanied by a member of the provider’s staff to further explain the programme in person and answer any questions the applicant may have.

6.3.4 Following the valuation the provider will write to the applicant making them a formal offer for the agreed percentage of their equity. If there are any category 1 hazards which require remedy, the applicant and the provider will need to agree how these will be treated (either by the applicant carrying them out if they are relatively simple/the applicant has sufficient expertise or by the RSL).   If the provider carries these repairs out refer to paragraph 5.0.

6.3.5 If agreement cannot be reached the Local Authority will need to be contacted to see if they can provide loans to carry out the necessary works (the mortgage rescue process will ‘freeze’ while this is being determined).

6.3.6 The offer letter will be accompanied by terms and conditions of the equity loan including details of the charge to be applied (1.75% p.a. of loan) and how this will rise over time (RPI + 0.5%).  If RPI is negative then the increase will be 0.5%.

6.3.7 Following the offer the provider should make Independent Financial Advice available to the applicant to enable them to make an informed decision.  The provider is responsible for ensuring that the applicant receives Independent Financial Advice and for meeting the fees of the Independent Financial Advisor. The provider should also refer the applicant back to the money advice agency and/or the Local Authority for any income maximisation or tenancy advice that the applicant may require.

6.3.8 The applicant must observe an eight-day stand still period before they formally accept or reject the offer. The applicant must accept the offer in writing. If the applicant does not agree to the offer then they will be referred back to the Local Authority to discuss alternative homelessness prevention options.

6.3.9 If the applicant agrees to mortgage rescue then the Agency recommends that they be advised to appoint a solicitor or conveyancer. The provider will make available an ‘instructions for solicitors’ pack. Click on the link to the legal documentation page.

6.3.10 Once the provider has received the signed deed of trust from the applicant the applicant’s solicitor will be responsible for contacting the applicant’s lender to ask the lender to confirm in writing it will issue consent to register a charge against the property. 

6.3.11 The consent to register can be used by the applicant’s solicitor to register a charge against the property with the land registry.

6.3.12 Once the provider has received confirmation from the lender that it has issued a consent to register a charge  and received a Certificate of Title and appropriate undertakings from the Applicant’s solicitor before it will agree to proceed, the provider can lodge a claim on IMS {DN build in a link} for the relevant grant and administration fee.  Please refer to 2.1.6.

6.3.13 On the day the charge is granted the provider will pay the equity loan to the applicant’s solicitor to enable them to redeem the relevant portion of their mortgage.

6.3.14 Following the completion of the equity loan the provider will refer the applicant back to the money advice agency for ongoing support and income maximisation work.

6.3.15 There is no requirement for a Home Information Pack or an Energy Performance Certificate.