MATRICS would like to thank both the Scottish Government and the Accountant in Bankruptcy for

their continued support and funding

Introduction

Two schemes operated by the Scottish Government help owners who are experiencing difficulties in paying their loans secured against their property:

• The Mortgage to Rent Scheme • The Mortgage to Shared Equity Scheme

Objectives

• Review of entry requirements• Application Process – How it works• Application Process – Tips on

completing the application• Application Process – Working with

the creditors

Statistics

• 2009/10 there were 303 successful mortgage to rent applications.

• No mortgage to shared equity applications were agreed

• From 1st April 2010 to 31st August 2010 there were 113 successful mortgage to rent applications

• Three mortgage to shared equity applications were agreed.

Entry Requirements

• Client has failed to reach agreement with lender on how to manage arrears or have had a trustee appointed to their estate who is forcing sale of property

• Value of home must be no more than the maximum levels

• Client must have been unable to make full payments on secured loan/mortgage for at least 3 months and have accumulated arrears of at least one month

• The client ineligible for other UK government support schemes or their property is still under threat of repossession (e.g. support for mortgage interest)

Entry requirements

• Client must not normally own a home elsewhere• Client must have lived in their home for the last

12 months• They must not hold capital in excess of £2k if

they are under 60 and £4k if they are over 60Additionally for mortgage to shared equity:• Hold 25% or more equity in your home• Not have trustee appointed• Have a capital and interest mortgage• Own a property which is above the Tolerable

Standard

Application Process

• Before an application can be considered owners must receive independent advice regarding their overall financial situation from a CAB, Money Advice outlet or local authority money advice centre. (www.scotland.gov.uk)

• Applications must be completed in full and contain all supporting documentation

Application Process

On receipt of application Scottish Government will:• Carry out initial assessment • Do a search against the property • Do a desk based valuation • If the application is eligible they will instruct a

Scheme 2 valuation (which will also identify cost of repairs)

• Obtain redemption statements from all lenders with loans secured against the property

THIS PROCESS TAKES APPROX 5 WEEKS

Application Process

If the open market valuation meets the eligibility criterion, the Scottish Government calculates the level of equity the owner has in the property and whether they will be considered for the MTR or the MTSE scheme.

Application Process

• Clients choice – Mortgage to Shared Equity

• Clients choice – Mortgage to Rent

Tips on completion

• Check that your client meets the criteria for the scheme they would like to apply for

• Ensure all sections of the application are completed

• Documentary Evidence (page 26, section 35)

• Advisers Letter (www.wiseradviser.org)

• CHECK APPLICATION

Working with the creditors

• Advise secured lender early in process that client applying for mortgage to rent/mortgage to shared equity

• Shortfalls – MAT/BBA Common Financial Statement

• Negotiation

• Lender Contacts – CML, FLA (www.wiseradviser.org)

Further Help & Support

MATRICSMoney Advice Consultancy Service:

T: 0845 123 2326 E: consultancy@matrics.org.uk