Questions and Answers

Q. Why is the estate being demolished when most of the houses are not in that bad a condition?

A. The properties on the estate are in need of modernisation. The original scheme for Cleadon Park involved the refurbishment of 254 properties. However, when this scheme was reviewed, it was concluded that this would not address many of the other problems of the estate which include:

• The age, method of construction and condition of many of the properties.

• The mix of house types including a high proportion of large 4 bedroom family houses and a lack of elderly persons bungalows.

• The design of the estate including very large gardens, long anonymous streets, small areas of open space and large back land sites that are not ‘owned’ by anyone and aid anti social behaviour.

By comprehensive redevelopment of the estate we are seeking to meet the needs that the community has told us about in over two years of discussion. That is, the existing community will stay together, but in houses that are modern, are easier to look after, have more storage space, are cheaper to keep warm, have smaller gardens in a setting that encourages community and that feels more secure.

Shared Equity Loans

I have heard about the shared equity loans available from E5 and have a number of questions in relation to them.

Q. Will I still be able to get a mortgage on a property if I have an equity loan?

A. Yes, providing you meet the lenders requirements, they will make an advance, as the equity loan is a second claim to the property. This enables the mortgage lender to have first claim on the property, which they would require to offer a mortgage.

Q. Do I have to sell the property after twenty years?

A. No, but you would have to repay the equity loan value, based on an independent valuation (at your cost) of the property, back to Enterprise 5.

Q. Can I repay the loan early even if I don’t sell the property?

A. Yes, but you would need to have your property re valued to find out how much is owed to Enterprise 5.

Q. If I don’t sell after twenty years, I could owe Enterprise 5 a substantial sum of money, how am I expected to repay this?

A. This is your responsibility and could be funded in a number of ways, such as an index-linked insurance policy taken out at the time of the equity loan, or by arranging a loan when the repayment is due. You are advised to seek independent financial advice as to which would be the best option for you as individual circumstances are different.

Q. Is there a maximum or minimum amount available to borrow?

A. Yes, the maximum equity loan would be £20,000, there is no minimum.

Q. Will I have to pay monthly instalments and interest on the loan?

A. There are no monthly repayments on the equity loan. The interest on the loan is basically equivalent to the percentage increase in the value of the property but is only charged when the loan is repaid. You are likely to repay more than you first borrowed as the value of your property will have risen and the percentage difference in value is equivalent to the interest on the loan.

Q. What would happen, in the unlikely event that the property value has decreased at the time of repayment?

A. You would still only have to repay the same percentage as originally agreed. So if a property purchased for £100,00 with a 10% equity stake was sold for £95,000 the repayment would be £9,500 (£500 less than the original amount).