Have your cake and eat it (or at least a large slice)

Sell your rental property, but leave some capital behind, invested as an income-generating equity loan to increase demand from buyers

BenefitsHow it works

Buy-to-Let may no longer be attractive and, ultimately, selling your rental property might be the best option. We recognise that you're a different type of seller, who may not want or need to remove the capital from the property that you're selling.

Unlike selling traditionally, Homewards lets you remain invested in the property by using some of your capital as an loan that contributes to a buyer's deposit. This increases buyer demand (potentially even from your current tenants, if applicable) and it lets you continue to benefit from the property through capital appreciation and a regular income as interest.

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Why sell with homewards?

Lose the Buy-to-Let mortgage risk

No more worries about climbing interest rates, new affordability checks, or the reduction in tax relief on mortgage interest (which "Section 24" has started).

Keep a stake in the property

Don't be forced to completely exit the property you chose to invest in. Let your equity stay put as an equity loan that appreciates with the property value.

A proportionate monthly income

You'll receive monthly interest payments on the equity loan you provide to support the buyer's deposit (pro rata).

Higher demand and a better deal

Making your property more affordable means more demand from buyers (possibly even your own tenants, if applicable) and you'll command a more competitive selling price.

Chain-free buyers

Since they'll be (largely) first-time buyers, there won't be a chain to worry about and you can sell quicker and easier.

All the hassle, gone

Forget the hassle of being a landlord, completely. No tenants, no regulation, no responsibilities. Instead, partner with buyers who'll look after the property, since it's now their home and their sole responsibility.
Selling traditionally
Lose the risk and tax burden of your Buy-to-Let mortgage
Forget the hassle of being a landlord
Keep your equity invested in the property
Continued income from the sold property
Opportunity to sell without having to remove tenants
Increased demand to help drive the best price possible
A chain-free sale, speeding up completion
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How does it work?

In a nutshell, when you sell your property, you can provide at least 15% of the property value as an equity loan to top-up the buyer's deposit.
FAQs
As with all mortgages, the loan will be secured by a charge over the property. As a lender providing an equity loan, your capital is at risk.
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FAQs

What's an "equity loan"?

Otherwise known as a "shared equity loan", it is a form of financial support that contributes to a home purchase by increasing a buyer's deposit and, therefore, their affordability. It allows buyers to borrow less from a commercial mortgage lender and gives them access to cheaper interest rates. It also makes a home purchase possible on a lower household income.

In return, the third party providing this support will have an equity stake in the property, proportionate to their investment, and will receive a monthly interest payment on the loan.

The loan is typically "interest-only" throughout the loan term (meaning the borrower only pays interest on the loan and won't need to repay capital until the end of the term, unless a capital repayment plan has been agreed in advance between the two parties). The loan will be secured as a "second charge" on the property, behind the commercial mortgage lender.

I have a question about this...

How much support can I provide?

Depending on how much your remaining Buy-to-Let mortgage is (if you even have one), the capital you wish to take out of the property and the eventual sale price, you will be able to offer buyers a certain amount of capital as an equity loan. We require sellers to provide at least 15%.

I have a question about this...

How much interest will I get on the loan?

You get to choose the interest rate and fix that rate for a certain number of years. But be aware that how you set the rate will impact the desirability of your property.

We will help you find the right level, but as a rule of thumb, we believe that between 3-4% (fixed for around 5 years) is fair in today's economic climate and will give you the best possible outcome.

As a comparison, this is similar to the income you might expect if the property was still a rental and it's also in line with a 95% LTV mortgage rate for first-time buyers.

After the fixed period, the interest rate will be variable based on the Bank of England Base Rate and increase in line with inflation (measured using RPI).

I have a question about this...

Why is the minimum support period set as 5 years?

We believe that 5 years will give both yourself and the buyer enough time to grow your equity in the property.

This is the minimum term, so you'll need to be comfortable that you won't need the money during that period.

If you want to leave the money in the property for longer, you can, by all means. This will likely attract more buyers too.

I have a question about this...

What if I have tenants? Can I offer the support and the home to them first?

If you currently have tenants in the property, they're likely to be comfortable in the home and your support may well be what they need to be able to afford the property.

We'd always suggest that you give them the first right of refusal to avoid them having to find somewhere else to live and to make the process simpler for yourself.

On top of that, we waiver part of our fee if you find the buyer yourself.

If it seems suitable, please refer them to us and we'll take over from there.

I have a question about this...

Will my money be safe?

Your deposit support equity loan will be secured via a second charge (just behind the buyer's mortgage provider), which will be registered at the Land Registry. This will ensure that your money is protected.

As for the buyer themselves, we will carry out strict KYC, AML, affordability and credit checks to ensure that you are lending to a trustworthy individual who will make their interest payments on time.

I have a question about this...

Is my capital at risk?

Like any equity investment, your capital is at risk. If house prices fall, your equity may be worth less than it was originally.

With Homewards, you have the second charge behind the buyer's mortgage lender. This means that if the value of the house is less at sale than it was at purchase, or if the buyer defaults and a repossession occurs, the bank will be repaid first (including due costs), followed by yourself, and lastly, the buyer.

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What kind of properties (and locations) does Homewards accept?

At present, we're looking at first-time buyer properties in London.

This could be anything from 1 - 4 bedroom houses, but most commonly, we'll be looking for 1 or 2 bed properties suitable for individuals, couples or young families.

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What if I want to sell multiple properties?

If you're looking to sell more than one property at a time, that's not a problem. We will even be able to offer you special rates on our fees.

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How does the sale actually work?

When the sale price is finalised, the buyer's and your solicitors will receive the product documentation as a package.

This will allow them to carry out the conveyancing, providing your bank with the funds to pay off your Buy-to-Let mortgage, providing you with any cash you wanted to withdraw and transferring the title deed over to the buyer, making the loan arrangement official and registering a second charge on the property for the equity percentage you are supporting the buyer with via the Land Registry.

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What if I have an Early Repayment Charge to pay?

This will depend on the terms of your existing mortgage on the property. If you do have a charge to pay, you should account for the cost through either taking (more) cash out of the equity you have during sale of the property, or through your own means.

I have a question about this...

How will you value my property?

When you're considering listing your property with us, we will give you a rough indication of how much we think that property is worth (based on market data). If you have already received a professional valuation, please provide this to us as it will help make sure we're on the same page.

If you choose to go ahead with the listing, we will have the property valued by a chartered surveyor.

I have a question about this...

What's my tax position using Homewards?

We aren't able to provide tax advice. We suggest that all sellers speak to an accountant before they list their properties, so they can understand their individual circumstances.

However, we should point out that if you sell the property for more than you originally bought it for (and it's not your primary residence), you might have Capital Gains Tax charge to pay within 30 days of the sale.

If you're using Homewards' service, you should be aware that you will need to either account for that charge through the amount of cash you take out of the property at sale, or have the funds to pay HMRC readily available elsewhere.

I have a question about this...

How does Homewards make money?

We make money through fees you pay for: 1. us finding a buyer for your property, 2. setting-up of the support loan arrangement and completing the sale of the property and, 3. handling the on-going administration and termination of the loan arrangement.

We also charge a fee to the buyers' mortgage lender for introducing them to buyers.

We are working through the finer details of what these fees will be and we'll update this when finalised.

I have a question about this...

Is Homewards regulated?

We are working on getting the relevant FCA permissions to be able to provide you and our buyers with our product.

We will only be able to provide you with that product once we have those relevant permission (that's why we're "Coming Soon").

I have a question about this...

What happens if they don't pay me interest on time?

Based on strict up front checks, this should be a minimal risk. However, we recognise that circumstances can change.

If the buyer/borrower doesn't pay you on time, we will begin a process to mediate the situation, beginning with communication to see if we can resolve the situation quickly, and ending with a repossession of the home, as a very last resort, if we're unable to re-sell it to another buyer on our platform. As you have a second charge, you will be paid back after the mortgage provider.

I have a question about this...

What happens if they don't pay their mortgage on time?

Again, based on strict up front checks, this should be a minimal risk.

However, if the buyer/borrower doesn't pay their mortgage lender on time, we will begin a separate process to mediate the situation, beginning with communication to see if we can resolve the situation quickly and ending with a repossession of the home, as a very last resort, if we're unable to re-sell it to another buyer on our platform. As you have a second charge, you will be paid back after the mortgage provider.

I have a question about this...

What happens if I need to get my money out for any reason?

The minimum term of the support is 5 years from the sale date. This will have been communicated and agreed upon before any arrangement is put in place. That would mean that your money is unavailable for withdrawal during that period.

However, in the future, we'll be looking to create a secondhand market so that, if you felt it necessary, we could market and re-sell your  deposit support equity loan to another investor.

I have a question about this...

Do I need to pay for maintenance, repairs, taxes, insurance, etc.?

No! The buyer is the sole owner of the property now and it's 100% their responsibility.

I have a question about this...

Can they sell at any time?

Yes. However, if they choose to sell during the term of the deposit support, we have the right of first refusal on the properties.

This just means that we have the right to re-market the property to other buyers, for a set timeframe, before they can put it on the open market.

We do this so we can give you a chance to let your investment grow and so we can offer your property to first-time buyers who need help with their affordability.

I have a question about this...

What if Homewards goes bankrupt?

If, for any reason, we cease to operate as a company during the term of your support, we will ensure that there is a third party available to carry out any remaining administrative duties between yourself and the buyer.

Apart from that, it will not make a difference to your situation.

I have a question about this...

When does the buyer/borrower have to repay the loan amount?

This will depend on how long the you have provided them with the support loan for.

The minimum term is 5 years, but you may have offered support for longer.

The buyer/borrower might be keen to extend the term of the support, at a later date. If so, we will pass on that request, on their behalf. You are under no obligation to accept the request for extension.

I have a question about this...

How much will they have to repay?

The value of the deposit support equity loan repayment will depend on the price of the house when they sell. This is because the support you provided is in the form of equity in the house.

This means that if the house price has gone up by 10%, they will pay back the original loan value, plus 10%.

If the house falls modestly, and they have equity in the house, that equity will be used to repay you.

If the house price falls dramatically, and their outstanding mortgage and initial equity contribution are worth the same or more than the value of the house, then you will share in the losses with them. In this instance, they won't have to repay the support loan themselves.

I have a question about this...

How will they be able to pay back the loan, even after 5 years?

They will be able to repay the loan with their own savings, by remortgaging or selling the property.

I have a question about this...

Can they sell on the open market?

As long as the loan term is up, yes. If they choose to sell before the minimum 5 year period, we have the right of first refusal.

This just means that we have the right to re-market the property to other buyers, for a set timeframe, before they can put it on the open market.

We do this so we can give you a chance to let your investment grow and so we can offer these houses to first-time buyers who need help with their affordability.

I have a question about this...

How do you calculate how much the house is worth when I sell?

If we are helping the buyer sell the house to another Homewards buyer, we'll have a chartered surveyor carry out a valuation on the property at the time of sale.

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