Equity renewal loans

What is an Equity Renewal Loan?

Most homeowners will have a lot of equity  tied up in their homes. Equity is the value of the home above total value of any mortgage or debt secured against it. Some of this can be used to pay for repairs and renovation.

Where there is sufficient equity, an 'Equity Renewal Loan' can be applied for. An equity loan is one where the cost of the loan rises with the value of a house.

How does repayment work?

If a loan of £15,000 is made to pay for works on a house that is worth £60,000 - that is, a loan of one quarter of the value of the house - the sum to be repaid will be one quarter of the value of the house. This is subject to a minimum repayment of the value of the original loan. If the value of the house rises in time to £80,000, the amount to be repaid will be £20,000.

Who can apply for a loan?

These loans are  available to people who cannot reasonably access commercial loans to raise some or all of the money needed to repair or renovate their home. They must be within a range of £2,500 minimum and £30,000 maximum.

It will be a condition of the loan that at the time it is made at least 20% of the value of the home should remain free of any existing mortgage or finance raised against it. If there is no existing mortgage or secured loan, the loan cannot be more than 50% of the value of the home before works are started.

Applicants must take advice from an Independent Financial Advisor whose fees will be added to any loan, unless paid for separately by the home owner.

Equity Renewal Loans will be made available in the following situations:

• For internal works to properties involved in the Craven/Paterson Street, Birkenhead neighbourhood facelift scheme
• In other identified areas, where there are high concentrations of sub-standard homes occupied by vulnerable households, for example people in receipt of certain means tested benefits or older people.
• In areas which are included in the Housing Market Renewal Initiative - Birkenhead, Tranmere, Rock Ferry and parts of Wallasey.
• For other properties considered by the Council to be presenting risks to the health and safety of the people who live in them. This will generally be where costs of essential work exceeds the maximum sum available as Home Repair Assistance (£6,000).

How much do I have to repay?

The cost of these loans depends on changes in the market value of houses and can be unpredictable. If the value reduces the original loan still has to be repaid.

Further information

To find out more about Equity Renewal Loans contact us using the details on the right.