Guide to Equity Loans
A condition of the MyChoice HomeBuy equity loan is that it must be repaid in full within 25 years of being issued, and the amount you must repay will depend on your home's value at the time you repay.
You pay interest on your loan, and the interest increases by 1% above the retail price index (RPI) each year. You receive annual notifications about interest you paid over the previous year and any interest changes from us. Your payments are interest-only and do not reduce the value of your loan.
Your loan agreement includes a clause that states you must ‘occupy the Property as the Borrower's only or main residence’. This means that you may not let your home without our permission.
If when you come to repay your loan the value of your home is the same as it was when you bought it, the amount you have to repay will be the same amount as you were lent.
If when you come to repay your loan the value of your home is less than it was when you bought it, the amount you have to repay will be less than you were lent.
It is likely though that your home will have increased in value since you bought it, so when you come to repay your loan the amount you have to repay will be more than you were lent.
10% Discount Offer
For a limited time, we are offering the opportunity for you to repay your equity loan with up to a 10% discount.
Option to repay before the end of the 25-year term
You don’t have to wait 25 years from the purchase date to repay your loan. Many customers pay off their loans when they move, remortgage, or have available savings.
If you choose to repay your equity loan before the end of the 25-year term by taking out another mortgage with a different lender, the amount you repay will no longer be linked to house price inflation and you may find it easier to make over-payments. If you are considering this option we would strongly recommend that you take independent financial advice.
Examples of Repayment
Here are a few examples to illustrate how repayment works (these are for illustrative purposes only and are not representative of the value of your home)
- Original Purchase Price: £250,000
- Equity Loan: £90,000 (36% of the purchase price)
- Home Value at Repayment: £400,000
- Repayment Amount: 36% of £400,000 = £144,000
- Original Purchase Price: £250,000
- Equity Loan: £90,000 (36% of the purchase price)
- Home Value at Repayment: £400,000
- Repayment Amount: 20% of £400,000 = £80,000
- Remaining Loan: 16% of property value
Repayment example with Discount
For a limited time, we are offering the opportunity for you to repay your equity loan with up to a 10% discount. Discover examples of equity loan repayments with discounts applied. (The figures used in these examples are for illustrative purposes only and are not representative of the value of your home.)
- Original Purchase Price: £250,000
- Equity Loan: £90,000 (36% of the purchase price)
- Home Value at Repayment: £400,000
- Repayment Amount Before Discount: £144,000 (36% of £400,000)
- 10% Discount: £14,400
- Repayment After 10% Discount: £129,600
If you take advantage of the discount, the discounted repayment amount cannot be lower than your original loan value. In that situation the discount would be the difference between the Repayment Amount before Discount and the amount of the Equity Loan. For example:
- Original Purchase Price: £200,000
- Equity Loan: £50,000 (25%)
- Home Value at Repayment: £210,000
- Repayment Amount Before Discount: £52,500
- Discount: £2,250 (i.e. the difference between the Repayment Amount before Discount and the amount of the Equity Loan)
If your property is worth less than when you purchased it, the amount you would have to pay to redeem the loan would be less than you were lent. You would repay the same percentage you were lent but based on the value of your home when you repay and no discount would be offered.
- Original Purchase Price: £200,000
- Equity Loan: £50,000 (25%)
- Home Value at Repayment: £180,000
- Repayment Amount: £45,000 (no discount would be offered)
Next steps (replace with data capture form)
If you would like to enquire about repaying your equity loan, please contact our Homeownership Compliance Team by emailing [email protected] or writing to us at Homeownership Approvals Team. 45 Westminster Bridge Road, London, SE1 7JB.
If emailing, please be sure to include the words "Equity Loan Redemption Offer" and your address in the subject line.
Frequently Asked Questions
If you’ve made improvements to your home and registered them with us, these will be ignored in the valuation for repayment.
For example, if you built an extension, the valuer will estimate your home’s value both with and without the extension as follows:
- Original Purchase Price: £250,000
- Equity Loan: £90,000 (36%)
- Home Value at Repayment (with improvements): £400,000
- Home Value at Repayment (ignoring improvements): £380,000
- Repayment Amount: 36% of £380,000 = £136,800
To register any improvements, you can email us at [email protected] and we will tell you what you need to do.
If you would like to talk to an independent financial adviser about your options, here are some contacts (although you are free to seek advice from any lender or financial adviser):
Censeo Financial
- Address: Oriel House 26 The Quadrant Richmond, Surrey. TW9 1DL
- Phone: 020 7090 7290 (option 1)
- Email: [email protected]
- Website: www.censeo-financial.com
Martin Fairchild JDC Independent Financial Advisers
- Address: Electroline House 15 Lion Road Twickenham, Middlesex, TW1 4JH
- Phone: 020 8755 5577
- Email: [email protected]
- Website: www.jdcifa.com
Important Terms
To benefit from the 10% discount offer, you will need to pay an administration fee of £300 including VAT and send a written valuation of your home to us within one month of the date of this letter. You will then need to repay your Equity Loan in full (less discount) or in part (less discount on the proportion you are repaying) if you are wishing to repay part of your loan, within 6 months of the date of the valuation report.
Your valuation will be valid for three months and this 6-month timescale allows for the valuation to be updated once, if needed. If you don’t comply with these timescales, the offer will expire and you will not receive the discount.
Please get in contact with us and we will provide all the information you need with regard to how to arrange the valuation of your home, and the form that the valuation must take.
Seek Financial Advice
Ensure you get appropriate financial advice before repaying your loan. You can discuss options with one of the advisers listed above or any advisor of your choice.
Homeowner Stories
Discover a collection of homeowner stories from previous Peabody New Homes purchasers and find out how we were able to help them onto the property ladder and find their dream home through Shared Ownership.
"Renting always felt uncertain. You never truly feel settled when your home belongs to someone else. It was frustrating knowing that at any moment, my flatmate and I could be asked to leave and have to start all over again. I wanted more stability, and Shared Ownership gave us that. Now, I can finally put down roots without worrying about what’s next."
"“Homes at Honeybrooke were very popular and I never thought that I would own a home again, so this is very special to me. I already know that this will be my forever home.” Bridget, Homebuyer at Honeybrooke. "
"It feels amazing to be paying my own mortgage instead of someone else’s. I also plan to staircase in the future to increase my ownership share. Never in my wildest dreams did I imagine owning such an incredible property in such a perfect location - but here I am."
Benefits to paying your Equity Loan now
Discover a range of benefits to paying your Equity Loan back today.
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Get 10% discount
Get a 10% discount on the cost of your equity loan when you pay it back before XX.
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Pay back now for less
If the value of your home increases over time, then the amount you will pay back will increase.
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Financial Advise
We can put you in touch with our panel mortgage advisors who can give you financial advice about your Equity Loan.
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Dedicated Support
Our experienced team is on hand every step of the way to make the process of repaying your equity loan as simple and easy as possible.