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| Loan Comparison |
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| Purpose of the loan: |
To recover the bankrupt borrower’s interest in the family home out of the bankruptcy estate.
Loans are subject to a minimum value of £2,500 and a maximum value of £25,000. |
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| Typical Example: |
Loan of £21,152.38 for 5 years (60 months)
59 x Interest only payments of £118.98
1 x final payment of £21,271.36, plus the Equity Participation Amount.
The final payment consists of the repayment of the Amount of credit of £19,675.78, Engagement fee of £352.50, Valuation fee of £176.25, Legal fees and expenses of £947.85, final interest payment of £118.98 and the Equity Participation Amount.
Total amount payable £29,767.78, plus the Equity Participation Amount.
Typical 8.8% APR (Variable).
No advance payment is required. Charges will be made for returned cheques or direct debits and for providing copies of documents such as statements.
The Equity Participation Amount will vary depending upon the individual circumstances of each loan. The Equity Participation Amount will be equal to 50% of the bankrupt borrower’s equity in the property at the time when the loan is repaid. |
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| Fees: |
In view of the costs involved in establishing the value of the equity held by the Trustee-in-Bankruptcy and obtaining his agreement together with that of any co-owner, to the equity buy out, the fees detailed below will be charged for setting up the loan. If the trustee approves the transaction in principle, then, before PDSL Ltd incurs further costs in relation to the equity value, you will be asked to undertake to pay the fees outlined below whether or not the loan ultimately goes ahead.
The following fees are payable:
Engagement fee £352.50 Inc VAT,
Valuation fee £176.25 Inc VAT,
Legal fees and expenses* £947.85 Inc VAT.
These can be included in the loan or paid in advance. Inclusion of the fees and expenses in the loan will increase the cost of the loan, by the fees and expenses total and amount of interest charged on them. The typical example shown above is given on the basis that they are included in the loan. *(Expenses may vary according to each loan transaction).
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| Interest charges: |
6.75%. (This is based upon the current Bank of England interest rate plus 2%. The rate will vary, after the agreement is made, whenever there is any change in the Bank of England rate, so that it is always 2% above the Bank of England Rate). |
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| Security: |
Security is required by way of a mortgage over the family home. The existing mortgage(s) or charge(s) over the property will have priority over the mortgage for this loan, and the amounts secured by such prior mortgage(s) or charge(s) will be deducted from the value of the property for the purposes of determining the value of the bankrupt borrower’s share in the property and the Equity Participation Amount. |
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| YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT |
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| Repayment of the loan: |
1. No repayment of the loan is required for 5 years.
2. The loan and the lenders Equity Participation Amount is repayable on the 5th anniversary of the date of the Loan Agreement.
3. The loan and the equity participation amount can be repaid at any time in the 5 years. It may be that you decide to sell the family home in order to raise the money to do this, in which case you will be free to do so. Alternatively, you may decide to obtain a replacement mortgage loan from another lender, or, possibly, a replacement mortgage loan with the same lender.
4. The valuation of the equity will be based on an independent professional valuation of the open market value of the property. |
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| Default: |
1. Default occurs where there is non-payment of the loan interest, or capital or Equity Participation Amount at any time for greater than 30 days.
2. Once default occurs the lender is entitled to recover all reasonable costs associated with enforcing its security.
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| Early termination: |
If the loan is repaid before the expiry of the 5 year period the Equity Participation Amount (if any) must also be paid at that time. |
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| Purpose of the loan: |
To recover the bankrupt borrower’s interest in the family home out of the bankruptcy estate.
Loans are subject to a minimum value of £2,500 and a maximum value of £25,000. |
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| Typical Example: |
Loan of £21,152.38 for 5 years (60 months)
6 x Interest only payments of £295.25
54 x Capital and interest payments of £560.31
Total amount payable £33,504.84
Typical 21.9% APR (Variable).
No advance payment is required. Charges will be made for returned cheques or direct debits and for providing copies of documents such as statements.
This example includes valuation fees, engagement fees, legal fees and expenses totalling £1,476.60. |
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| Fees: |
In view of the costs involved in establishing the value of the equity held by the Trustee-in-Bankruptcy and obtaining his agreement together with that of any co-owner, to the equity buy out, the fees detailed below will be charged for setting up the loan. If the trustee approves the transaction in principle, then, before PDS Lending Ltd incurs further costs in relation to the equity value, you will be asked to undertake to pay the fees outlined below whether or not the loan ultimately goes ahead.
The following fees are payable:
Engagement fee £352.50 Inc VAT,
Valuation fee £176.25 Inc VAT,
Legal fees and expenses* £947.25 Inc VAT.
These can be included in the loan or paid in advance. Inclusion of the fees and expenses in the loan will increase the cost of the loan, by the fees and expenses total and amount of interest charged on them. The typical example shown above is given on the basis that they are included in the loan. *(Expenses may vary according to each loan transaction). |
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| Interest charges: |
16.75%. (This is based upon the current Bank of England interest rate plus 12%. The rate will vary, after the agreement is made, whenever there is any change in the Bank of England rate, so that it is always 12% above the Bank of England Rate). |
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| Security: |
Security is required by way of a mortgage over the family home. This will rank behind the prior mortgages. |
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| YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT |
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| Repayment of the loan: |
1. Capital repayment holiday for 6 months during which only interest payments are required to be made.
2. After 6 months the loan and interest is repaid in equal instalments over a 54 month period. (The total loan period is 5 years). |
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| Default: |
1. Default occurs where there is non-payment of the loan interest and/or capital at any time for greater than 30 days.
2. Once default occurs the lender is entitled to recover all reasonable costs associated with enforcing its security.
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| Early termination: |
If the loan is repaid before the expiry of the 5 year period any amount of capital and interest which has by that time accrued but has not been paid must then be paid at the repayment date. |
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Secured Equity Participation Loan
Typical 8.8% APR (Variable) |
Interest and Capital Repayment Loan
Typical 21.9% APR (Variable) |
Advantages
to the bankrupt borrower |
1. Very low cash outflow on borrowing for 5 years.
This is important, as it allows the bankrupt to reduce his cash outflow commitments at a crucial (and sometimes desperate) stage.
This is designed to help the bankrupt get back on his feet as quickly as possible.
2. No capital repayment for 5 years.
3. Can buy out loan, remortgage or sell home (to buy a new one) at any stage during the loan.
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All of the future growth in the property value is shared between the bankrupt borrower and the spouse. |
Disadvantages
to the bankrupt borrower
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1. The loan participates in the equity growth (if any) in the property. The growth (if any) reflects the nature of the lending risk.
However, it is very important to emphasise:
• Without the loan or some other means of purchasing it back out of the bankrupt estate, the bankrupt loses all his equity (forever) in his home.
• The value of the Equity Participation is based upon the value of the bankrupt borrower’s share in the equity only.
2. The final repayment amount includes the loan advance (fees and expenses if included) and Equity Participation Amount payable at the same time.
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1. Puts pressure on cash flow as need to pay back both interest and capital, at a time when it may be hard to sustain.
2. Requires repayments of capital in instalments after 6 months (the Secured Equity Participation loan does not).
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A WRITTEN QUOTATION OF THE LOANS MAY BE OBTAINED UPON REQUEST
SECURITY OVER THE BANKRUPT’S PROPERTY WILL BE REQUIRED FOR BOTH TYPES OF LOAN
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT
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PDS is affiliated to Personal Debt Solutions Lending Limited and recommends loans to bankrupts provided by that company in appropriate circumstances.
There may be loans available to bankrupts by other loan providers. The information contained in this website is provided by Personal Debt Solutions Lending Limited to PDS. PDS may earn commission from Personal Debt Solutions Lending Limited in respect of introductions made.
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Loan provider: Personal Debt Solutions Lending Limited
Registered no 2687805
28th Floor, Tower 42, 25 Old Broad Street, London, EC2N 1HQ,
Freephone: 0800 107 0050,
CCA Licence No 557949 |
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