The Loans for Mortgage Interest Regulations (Northern Ireland) 2017

Regulation 17

SCHEDULE 4 Direct payments to qualifying lenders

Direct payments

1.  Each loan payment made to a qualifying lender directly under regulation 17(1) (direct payments to qualifying lenders) shall be the amount calculated under paragraph 2 or 3 of this Schedule.

Determining the amount to be paid to a qualifying lender: one qualifying loan

2.—(1) Where one qualifying loan or alternative finance arrangement has been made to a claimant by a qualifying lender, the amount that is to be paid direct to that lender is to be calculated as follows.

Step 1

Find the amount of each loan payment calculated under regulation 10 (calculation of each loan payment).

Step 2

Deduct from the amount resulting from step 1 the amount referred to in paragraph (2).

(2) The amount referred to is the amount payable under a policy of insurance taken out by the claimant to insure against the risk of not being able to maintain repayments of loan interest or alternative finance payments to a qualifying lender.

Determining the amount to be paid to a qualifying lender: more than one qualifying loan

3.  Where more than one qualifying loan or alternative finance arrangement has been made to a claimant by a qualifying lender, the amount that is to be paid direct to the qualifying lender is to be calculated as follows.

Step 1

Calculate an amount in accordance with Steps 1 and 2 of paragraph 2(1) in respect of each of these loans or alternative finance arrangements.

Step 2

Add those amounts together.

Qualifying lenders to apply direct payments to discharge of claimant’s liability

4.  Where a direct payment is made under regulation 17(1) (direct payments to qualifying lenders) to a qualifying lender, the lender must apply the amount of the payment determined under either paragraph 2 or 3 of this Schedule towards discharging the claimant’s liability to make owner-occupier payments in respect of which the direct payment was made.

Application by qualifying lenders of any amount which exceeds liability

5.—(1) Where—

(a) a direct payment is made to a qualifying lender under regulation 17(1) (direct payments to qualifying lenders); and

(b) the amount paid exceeds the claimant’s liability to make owner-occupier payments to the qualifying lender,

the qualifying lender must apply the amount of excess in accordance with sub-paragraph (2).

(2) Subject to sub-paragraph (3), the qualifying lender must apply the amount of excess as follows—

(a) first, towards discharging the amount of any liability of the claimant for arrears of owner-occupier payments in respect of the qualifying loan or alternative finance arrangement in question;

(b) if any amount of the excess is then remaining, towards discharging any liability of the claimant to repay—

(i) the principal sum in respect of the qualifying loan or alternative finance arrangement, or

(ii) any other sum payable by the claimant to that lender in respect of that qualifying loan or alternative finance arrangement.

(3) Where owner-occupier payments on 2 or more qualifying loans or alternative finance arrangements are payable to the same qualifying lender, the lender must apply the amount of the excess as follows—

(a) first, towards discharging the amount of any liability of the claimant for arrears of owner-occupier payments in respect of the qualifying loans or alternative finance arrangements in question;

(b) if any amount of the excess is then remaining, towards discharging any liability of the claimant to repay—

(i) the principal sum in respect of the qualifying loans or alternative finance arrangements, or

(ii) any other sum payable by the claimant to that lender in respect of the qualifying loans or alternative finance arrangements.

Fees payable by qualifying lenders

6.—(1) A fee is payable by a qualifying lender to the Department for the purpose of meeting the expenses of the Department in administering the making of direct payments to lenders.

(2) The fee is £0.39 in respect of each occasion on which a direct payment is made to the qualifying lender.

Election not to be regarded as a qualifying lender

7.—(1) A body or person who would otherwise be within the definition of “qualifying lender” in the Order—

(a) may elect not to be regarded as such for the purposes of these Regulations by giving notice to the Department in writing; and

(b) may revoke any such notice by giving a further notice in writing.

(2) In respect of any financial year, a notice under sub-paragraph (1) which is given not later than 1st February before the start of the financial year, takes effect on 1st April following the giving of the notice.

(3) Where a body or person becomes a qualifying lender in the course of a financial year—

(a) any notice of an election by the body or person under sub-paragraph (1)(a) must be given within 6 weeks (“the initial period”) beginning with the date on which the body or person becomes a qualifying lender; and

(b) no direct payments may be made under regulation 17(1) (direct payments to qualifying lenders) to the body or person before the expiry of the initial period.

(4) Sub-paragraph (3)(b) does not apply in any case where—

(a) the person or body gives the Department notice in writing that that provision should not apply; and

(b) the notice is given before the start of the initial period or before that period expires.

(5) In relation to a notice under sub-paragraph (1)—

(a) where the notice is given by an electronic communication, it must be given in accordance with Schedule 1 of the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations (Northern Ireland) 2016(1);

(b) where the notice is sent by post, it is to be treated as having been given on the day the notice was received.

Provision of information

8.—(1) A qualifying lender must, in respect of the claimant, provide the Department with information as to—

(a) the owner-occupier payments payable by the claimant to the lender;

(b) the amount of the qualifying loan or alternative finance arrangement in respect of which owner-occupier payments are payable;

(c) the purpose for which the qualifying loan or alternative finance arrangement was made;

(d) the amount outstanding on the qualifying loan or alternative finance arrangement;

(e) the amount of arrears of owner-occupier payments due in respect of the qualifying loan or alternative finance payment;

(f) any change in the owner-occupier payments payable by the claimant to the lender; and

(g) the redemption of the qualifying loan or alternative finance arrangement,

in the circumstances specified in sub-paragraphs (2), (3) and (6).

(2) The information referred to in sub-paragraph (1)(a) to (e) must be provided at the request of the Department where the claimant has made a claim for a qualifying benefit, provided that the Department may only make one request under this sub-paragraph.

(3) The information referred to in sub-paragraph (1)(d) and (f) must be provided where the Department makes a request for that information on or after the first day in respect of which loan payments are paid, or to be paid, to the qualifying lender on behalf of the claimant (“the first day”), provided that the Department may only make a request under this sub-paragraph once in each period of 12 months referred to in sub-paragraph (4).

(4) The period of 12 months is the period of 12 months beginning with the first day and each subsequent period of 12 months commencing on the anniversary of that day.

(5) A request may be made under sub-paragraph (3) for the information referred to in sub-paragraph (1)(d) even though that information has been requested in the same 12 month period (as referred to in sub-paragraph (4)) under sub-paragraph (2).

(6) The information referred to in sub-paragraph (1)(g) must be provided to the Department as soon as reasonably practicable once the qualifying lender has received notice that the qualifying loan or alternative finance arrangement is to be redeemed.

Recovery of sum wrongly paid

9.—(1) In the following circumstances, a qualifying lender must at the request of the Department repay any amount paid to the lender under regulation 17(1) (direct payments to qualifying lenders) which ought not to have been paid.

(2) The circumstances are that, in respect of a claimant—

(a) the loan payments are terminated under regulation 9(2) (duration of loan payment);

(b) the qualifying loan or alternative finance arrangement in respect of which owner-occupier payments are made has been redeemed; or

(c) both of the conditions in sub-paragraphs (3) and (4) are met.

(3) The first condition is that the amount of each loan payment determined under regulation 10 (calculation of each loan payment) is reduced as a result of—

(a) the standard rate determined under regulation 13 (standard rate to be applied under regulations 11 and 12) having been reduced; or

(b) the amount outstanding on the qualifying loan or alternative finance arrangement having been reduced.

(4) The second condition is that no corresponding reduction was made to the amount calculated in respect of the qualifying lender under paragraph 2 or 3 of this Schedule.

(5) A qualifying lender is not required to make a repayment in the circumstances described in sub-paragraph (2)(a) unless the Department’s request is made before the end of the period of 2 months starting with the date on which the loan payments are terminated.

(1)

S.R. 2016 No. 220.