Hi all,
I have just been reading through my IVA proposal ready for the creditors meeting on Monday and I just want some clarification on the equity clause (It's a bit last minute[:I])It says about "obtaining 2 valuations after month 54 and that an acceptable quotation is one that provides a maximum of 85% loan value of the property less existing secured borrowings" what does this actually mean? It also says that no remortgage will be enforced if the amount of my equity falls below £5000 after the remortgaging costs have been deducted, the costs are documented as £3348 will this change in 54months time or is that the maximum costs allowed regardless of the change in remortgage fees in the future? I hope some one can help me out here as this is the only part of the proposal that I feel I don't fully understand.
Say your house is worth £200,000 in the fifth year of your IVA, and you have a mortgage of £150,000. You will be required to raise a new mortgage based on 85% loan to value - ie £170,000, use that money firstly to pay off the £150,000, leaving you with £20,000 to introdue into the voluntary arrangement - with the costs of the re-mortgage also being deducted.
Is it also correct that if the mortgage is joint, then only 50% of the equity is payable? i.e. in Melanie’s example only £10,000 would be payable by the person in the IVA.
Yes - the equity would be split as Andy has mentioned, and the new mortgage payments would be limited to 50% of your current disposable income - at which time your IVA payments would therefore cease.
Thank you all, its much easier for me to get my head around using your example melanie. I was panicking wondering whether BR would have been the better option seen as I am in 10-15K negative equity but the equity clause seems fair. At least my friend will get to keep 50% of any equity pheweee.
If you are that far into negative equity, it is doubtful whether you will have to raise anything during the final year, especially as the housing market is not predicted to improve for a couple of years.
Happy we were able to help, and don't hesitate to post any more queries you may have.
