approved?

[kahlan]

Hello, had my creditors meeting on 18th, Northern Rock want me to re-mortgage after 4 years and give up 85% to them. I s this normal procedure?

To be honest, if my small flat is going to be worthless to me in four years (I'm planning on moving straight the IVA) then it seems pointless keeping it in the first place.

Should I just go bankrupt and start afresh? If so how long would it take and how quickly would I have to move out to rent??

HELP!!!

[Storm]

Remember that the amount you can remortgage to is governed by both your income and whatever loan to value you can achieve at the point of application in 48 months time.

eg: £100k value - remortgage 80% = £80k minus whatever you owe on the existing mortgage. They therefore want 85% of the equity being released by the process.

The only things that would make a major difference would be the increase in value over the 4 years..... or if you are expecting to be earning significantly more which would give you greater borrowing potential.

If you are not sure how much your property is likely to increase check www.yourmortgage.co.uk they have a postcode level prediction. A typical remortgage L2V% is 80% during an IVA.

As with any mortgage you have to be able to afford the payments and this would govern your potential equity release.

[neverending]

I would like this point clarified on this site.Is it as Storm states[85% of the amount that you can release by remortgage in year 4] or is it 85% of the equity in your property as it is NOW to be released in year 4.There is a big difference !!!

[kahlan]

to quote:
'During the fourth year of the voluntary arrangement the Supervisor is to obtain an independent professional open market valuation of the property at ..... The property is to be re-mortgaged for no less than 85% of the open market value and the debtor’s equitable interest from the re-mortgage must be paid to the Supervisor before the completion of the arrangement. If the debtor is unable to obtain a re-mortgage the arrangement may be extended by twelve months in order to allow contributions in lieu of equity. Should the debtor fail to introduce funds in respect of equity this will constitute a breach of the terms of the voluntary arrangement and the Supervisor must convene a meeting of creditors in order to agree an appropriate course of action.

If the debtor’s property situated at .... is re-mortgaged during the course of the arrangement and the resulting funds paid into the arrangement, the level of monthly contributions payable by the debtor to the Supervisor can only be reduced by an amount equal to the increase in the mortgage payment due. If the post-re-mortgage mortgage payment is less than or equal to the previous level, there will be no reduction in the monthly contributions payable to the debtor to the supervisor.'

Does this make any more sense? I hope so because I'm confused!!!!

[Storm]

It reads to me that you are expected to release equity in your property in year 4 based on its market value at that point.

The remortgage must be equal to 85% of the open market value ie if OMV = £100,000 the remortgage will be at £85,000 - whatever you owe on the outstanding mortgage is then deducted ie £60k which leaves £25k which must be paid into the IVA and distributed to your creditors accordingly.

The last provision simply allows you to reduce your monthly IVA payments to account for your potential increased mortgage payments with the release.

The other component re additional year covers the potential for you not being in a position to remortgage at 85% ie you will need to make a further 12 payments in lieu of releasing equity.

[kahlan]

Thanks for explaining in english!

So considering I want to sell in 5 years is it worth me going ahead with the IVA even if I do not make anything on the property? - I won't money for expenses etc.

aaaaah I don't know CONFUSED!!!!!!

[Storm]

You will still have some equity in the property ie 15% which will be very useful. It is difficult to mortgage anything over 85% Loan to Value for a number of years following either Bankrupcy or IVA.

From the previous example you would have £15k equity left in the property which you can use to purchase another property or release after your IVA by selling.

[kahlan]

thank you so much

MERRY CHRISTMAS!!!!!!!!!!!!