Equity release depend on money owed?

[mel.d]

Hi. If in an IVA does everyone who has a mortgage HAVE to get equity release in the last 4th or 5th year? If I owe creditor a total of £30k by the 4th or 5th year I would hope that not loads would still have to be paid so would I still be expected to try and release equity? Thx.

[MelanieGiles]

Hi mel

Sorry but the bottom line as far as your creditors is concerned is to pay them as much as you can afford to over the five year period. If that means equity release, they will not discount the amount to the tune of the contributions you have made so far.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[iva experts]

You will always have to pay your creditors to the best of your ability so equity would be expected to be released for the benefit of your creditors.

Hope this information is of use

Regards. IVA Experts

[Oliver]

As the others have stated you will always have to pay to the best of your ability even if this means returning 100% of the money owed.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[ivoriva]

Plus 8% interest and IP fees, if they can also be covered! Bottom line is, if you think you can pay them in full over 5 years with any assets/equity then dont go for a IVA! Do a DMP if you want to protect equity/assets, or if you are able, make a full and final offer based on equity/assests you have available.

[Oliver]

Ivoriva makes a good point, a good rule of thumb is to divide the total debt by 60 months and if your DI is above this figure you should at the very least consider a DMP.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[Adam Davies]

Hi
I,m still,personally,not happy with the equity release clause put into the majority of IVAs where property is owned.
I can totally agree with a valuation at the start of the IVA and an agreed amount to be released at year five,but find the "open ended" year five valuation strange.Having to go through a tough five years and not knowing how much you will have to remortgage for and then "having" to increase your mortgage by this unknown amount a strange one.Afterall you are turning a short term debt into a long term one.A strange situation.
I understand the need to offer as much as possible but there needs to be a "reasonable" amount and the goal posts need to be clear from day one of the IVA.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[Oliver]

You'd be happier with the scenario in Scotland Andy. In a Scottish Trust Deed the house is valued at the beggining of the Trust Deed, 100% of this equity must be released over the course of the agreement (3 years) but any future equity growth is protected.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[ivoriva]

How come Scotland always seems to get a better deal, maybe we should forget the british government and let the scottish parliment rule the land!

Im not scottish btw.

[Adam Davies]

Hi
Now that does sound a sensible solution.How can we get this as standard in England,Wales and Ireland ?
regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[ivoriva]

By asking the SNP to stand in counties across England, Wales and NI in the next general election?

[tracy.h]

Dont worry Gordon Browns Scottish maybe he'll bring some of there policeys with him [haha]We can live in hope.

[Sadsack]

Hi

This raises quite an important issue in terms of "protecting ones assets". I understand that anyone who has property entering an IVA has to offer the creditors as much as they possibly can to clear their debt in 5 years. Under normal circumstances, this would be quite easy - remortgage/sell. However, what happens if there is insufficient equity in the property for - a. having a small surplus to allow the debtor to purchase a smaller property and - b. to pay over a lump sum in equity.

I don't believe it would be too unfair to have some % of the equity to put a deposit down on another property.

I ask these questions as I am in a bit of a pickle regarding equity release. I have raised this issue on another thread, but wonder if there is anyone out there who could possibly throw some light on the subject. I agree with Andy that there needs some guidance right from the start of the IVA as to how much equity needs to be released at THE END OF THE 5 YEAR IVA. Not just this open ended valuation - "Oh, your property now has £100k equity, we want all of it".

I am desparate to sell my property, not only for the benefit of the IVA, but for the benefit of not having a HUGE mortgage payment every month. My IVA (although not mentioned in the modifications) requests that I release equity within the 1st year (I have to sell as I would not be able to afford the mortgage payments and IVA payments if I attempt to re-mortgage) and purchase another property, then release equity again in year 4.

Seems a little harsh - but I spent the money in the first place!!!!

Any advice or thoughts??

Sue

[Adam Davies]

Hi Sue
I think that any equity release has a limit of about 85 percent,rather than the whole 100 percent of equity,bearing in mind that people can normally only remortgage to 90 percent of house value.
So if I understand it correctly if your house was worth 200k you could remortgage to 90 percent,180k and if your original mortgage was 100k you would be required to pay over 85 percent of the 80k equity[68k]
Someone correct me if I,m wrong,please

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[MelanieGiles]

I am afraid that the subject of fairness often goes out of the window when you have debts to repay. I agree that equity should be dealt with based on its value at the beginning of the case - there is a working party currently working on this, and I gather that this is going to be its recommendation. My proposals always deal with the equity on a "current" basis, however they are often modified by creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk