Homeowners need extra care before signing
A Scottish Trust Deed can be suitable for some homeowners, but your trustee will usually look at whether there is any equity in your property. Equity is the difference between the value of your home and the amount secured against it, such as your mortgage.
What is equity and why does it matter?
Equity is the value in your home after secured borrowing is taken into account. For example, if your home is worth £160,000 and your mortgage balance is £150,000, your equity may be around £10,000 before selling costs and other factors are considered.
If there is meaningful equity, your trustee may expect that this is addressed in some way as part of the arrangement. That does not automatically mean you will lose your home, but it can affect what options are available to you.
Can I usually stay in my home?
Many people remain in their home while in a Trust Deed, especially where mortgage payments remain affordable and the property is not at immediate risk. However, staying in the property and how equity is dealt with are separate issues.
- You may continue paying your mortgage as normal if it is affordable
- Your mortgage lender is not usually part of the unsecured debt arrangement
- Arrears on secured borrowing may still need separate attention
- Equity may need to be reviewed near the end of the Trust Deed
How is property equity sometimes dealt with?
Depending on your circumstances, a trustee may discuss one or more of the following:
- A review of the property value later in the arrangement
- A possible remortgage if it is realistic and affordable
- A secured loan alternative (if permitted and suitable)
- A third-party lump sum from family or another source
- An extension of payments instead of releasing equity
Not everyone can remortgage, and many people in debt solutions cannot obtain further lending on reasonable terms. If borrowing is not realistic, other approaches may be considered instead.
What if there is little or no equity?
If there is little or no available equity after allowing for mortgage balance and likely costs, the impact on your home may be more limited. Even so, your trustee may still want to review the position later if the arrangement runs for several years.
What about joint ownership?
If you own your home jointly with a partner or another person, this can make things more sensitive. A trustee will usually only be dealing with your share, but joint ownership can affect how options are discussed. If another person’s interest is involved, it is especially important to get clear advice before agreeing anything.
Can a Trust Deed stop repossession?
A Trust Deed does not automatically solve mortgage arrears or secured debt problems. If your main issue is mortgage arrears, you may need specific advice about your lender, repayment arrangements, or whether another solution is more appropriate.
Questions homeowners should ask before signing
- How much equity do I have, realistically?
- Will my property be reviewed during or near the end of the arrangement?
- What happens if I cannot remortgage?
- Could payments be extended instead?
- What if the property is jointly owned?
- What happens if my mortgage arrears increase?
Bottom line
Yes, some homeowners can keep their home in a Scottish Trust Deed — but you should never assume the home is outside the process. Equity, affordability, ownership structure, and mortgage position all matter.