Ways to Pay for Major Works
We understand that most people are not able to
pay large bills for major work without adjusting their budgets or
arranging loans. The following information covers the main ways you
can pay the charges for major work.
Paying the full amount
If you can, please pay the total debt
immediately (within three weeks of the date of the invoice) using
your own funds.
Paying in installments before work is
completed
If we have sent you an estimated
service-charge invoice for major work at the start of a contract,
we will accept monthly interest-free instalments for the length of
the contract, until we have agreed a final account with the
contractor. When we are sent a breakdown of the final account, we
will work out the actual payment for the work and send you a
statement showing the difference between the estimated bill we sent
you and the actual costs. If the estimated bill we sent you was too
low, we will send you another invoice. You will need to make
arrangements for paying the extra invoice and any money still owing
from the earlier estimated invoice immediately, using any of the
other options shown here.
If the estimated bill was too high, we will
tell you how much is due to you. We will only give you a refund if
your service-charge account is fully paid.
Paying in installments after the end
of a contract
We may be able to agree with you that you can
pay the amount you owe us over 12 or 18 months. If you want to do
this, you must write to us within three weeks of the date of the
invoice and let us know how much you are going to pay each month.
We will not be able to arrange this over the phone. As long as the
amount you offer to pay will clear the debt within 12 or 18 months,
we will agree to your offer and tell you when you must make your
first payment. You must make regular payments every month – a
standing order form will help you do this.
Please remember that if you miss any of the
monthly payments, and you have a mortgage on the property we will
write to your mortgage company to recover any outstanding amounts
due. If there is no mortgage lender we will refer the debt to
our solicitors immediately to recover the amount you owe in the
county court.
A ‘statutory’ or ‘discretionary’
service-charge loan from the council
You may be entitled to a loan from the
council, either by law (a statutory loan) or, if you are not
entitled to a statutory loan, a discretionary loan.
Any invoices we send you for major work will
include information about how you can apply for a service-charge
loan. Please note that at the moment, we can only offer a
service-charge loan where the service charge is for repairs or
maintenance. We cannot give you a loan to pay off other
service-charge debts.
The loan would be secured by a charge on the
property. However, the interest rate that applies is set by the
Government so it is likely that you should be able to get a loan at
a lower rate of interest from a commercial mortgage
lender.
If you are entitled to a statutory loan the
council must allow it, whether you can afford it or not. But the
law sets out the amount you can borrow and the term of the loan. If
you are not entitled to a statutory loan, the council can offer you
a discretionary loan. The terms of discretionary loans can be a bit
more flexible than for statutory loans. For example, with a
discretionary loan, the council would be able to agree a longer
repayment period than would be allowed for a statutory loan.
If you are receiving Income Support, the
council can offer an ‘interest-only’ loan. This means that you do
not repay the amount of loan we offer (the capital), but instead it
is set up as a charge on the property. You only pay the interest
due on the loan each month. If you are on Income Support, your
benefit can be adjusted to include the amount of interest you have
to pay. You would have to apply to the Benefits Agency for help to
meet the interest payments. The loan (the capital) would be repaid
when the property is sold, or it can be repaid earlier with a
lump-sum payment.
Re-mortgaging
This option does not directly involve either
us or the council. You could ask your existing mortgage lender for
another loan to pay the service-charge bill for the work. Usually,
this would involve the amount of the loan being added to the amount
you already owe on your mortgage. Your mortgage lender would then
work out a new rate of repayment on your mortgage. They may also
consider extending the mortgage term – for example, from 25 to 30
years – to keep the repayments affordable.
If you want to consider this option, you
should contact your existing lender in good time to discuss the
matter. Most lenders are prepared to approve or refuse a loan in
principle before the council has sent you the details of your share
of the cost of the work.
Please note that where the bill is not in
dispute, or where you have disputed the bill but a court (or
arbitration panel) has ruled that you should pay the bill, we are
entitled to contact your mortgage lender to ask them to settle the
debt on your behalf.
If you are over 60 or under 60 with
disabilities, you may be able to get help in the form of a low-cost
loan from the Home Improvement Trust. Ask the Right to Buy and
Leasehold Services team for a leaflet, or contact the trust
directly.
The Home Improvement Trust
7 Mansfield Road
Nottingham
NG1 3FB
Freephone helpline: 0800 783 7569
E-mail: info@hitrust.org
Fax: 0115 934 9501
Website: www.houseproud.org.uk/Homeowner/Index.php
We take a charge on the
property
If we agree that you cannot afford any of the
options described above, with your agreement we could consider
taking a charge on the flat to secure the debt. This is similar to
a mortgage, but you would not have to make any monthly payments
towards the debt. Instead, when the lease of the flat is
transferred (for example, if the flat was sold), you would have to
pay the charge in full, along with the interest due.
This option would be a last resort, and would
only be considered if the only alternative was court action to
recover the lease – this means repossessing your home.
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