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Scottish Trust Deed Forum
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Topic starter
23/01/2012 10:44 pm
Hi there,
I noticed that it is quite a common topic but was looking for clarity on my position as my unsecured loan is with my mortage lender.
I am 25 months into my trust deed but did not pay the £500 to protect any equity as at the time there wasn't any in my flat.
I bought my flat in 2006 for £86,000, Of which, the mortgage was £77,000 interest only with Northern Rock. The remaining £9,000 was an unsecured loan which was also with Northern rock. I am no longer paying the unsecured monthly payment, only the secured mortgage.
My mortgage has now been taken over by Northern Rock Asset Management. My question is once my trust deed is complete, will the £9,000 difference between my mortgage and property value be equity that Northern Rock Asset Management, as one of my creditors could potentially ask to have back? This based on the assumption that my properties value has remained the same, which I suspect has.
I have been in touch with my trustee and they advised that the will look into accepting the £500 despite being into my final year. It's not cash I have readily available so I am hoping to avoid this if I can.
Any advice would be greatly appreciated.
Many thanks
23/01/2012 10:56 pm
Hi Alix30
No, the unsecured part is a claim in the trust deed. Nram cannot and will not look for this.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
23/01/2012 11:00 pm
Welcome to the trust deed forum alix30.
If there is equity in your home your trust deed firm will feel obligated to ensure it's raised to help repay your creditors.
As you consider that there is equity it might be a good idea to ensure that £500 is paid over. It needs to be raised from a third party rather than yourself so maybe family could help?
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
Topic starter
23/01/2012 11:04 pm
Many thanks for your quick response. I was concerned that as my mortgage would be less than my property value, that my creditors would have a claim against the difference.
You've put my mind at ease, thanks again!
Topic starter
23/01/2012 11:08 pm
Hi again,
Sorry, now i'm a little confused. I'm not sure if the £9,000 will be classed as equity? Once my trust deed ends, my flat value will be approx £86,000 with mortgage balance of £78,000. The difference being the unsecured loan which will have been cleared during my trust deed.
I hope this makes sense!?
23/01/2012 11:35 pm
It does.
The equity is the value minus any secured loans, such as a mortgage.
The unsecured loan is irrelevant to the calculation.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
23/01/2012 11:36 pm
Hi alix30
The unsecured sum is completely unrelated. The only person who can clarify the equity is the trustee. He will either say there is nil or look for the £8k value less mortgage.
Its the reason why its extremely important to have this agreed at the start.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
Topic starter
23/01/2012 11:39 pm
Thank you for confirming.
Just wondering how it works when there is equity in terms of repaying anything to creditors? As the equity is tied up in the property it's not cash that I would have available. Would it be a case of another payment plan?
24/01/2012 12:09 am
Hi alix30
Yes, normally an extension to the trust deed to pay for the equity.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
