equity release in year 4

[rickyg33]

When the equity is released in year 4, this obviously has the effect of increasing mortgage payments and thus expenses.

I presume there's a corresponding reduction in monthly payments into the IVA for the final 12 months?

rickyg

[carlmcmullen]

You are correct Ricky

Normally once the re-mortgage has completed and the equity has been introduced then this would conclude your IVA and no further payments made.

Carl

[rickyg33]

so it's not a 5 year 'deal' then?

4 years plus an equity release before year 5 commences

[carlmcmullen]

it depends upon the terms you have agreed.

It may be that the final act under the IVA will be to introduce the remortgage money. Alternatively, it may be that once you have introduced the money you lower your contributions for the remainder of the period to the extent that your mortgage subscription has increased.

[MelanieGiles]

Equity is now released during the final year, and you will not have to make ongoing payments providing you are left with disposable income of less than £50 - which is probably quite likely.

[Adam Davies]

Hi Mel
I'm not sure about that
If the protocol states that the increased mortgage cost can't exceed more than 50% of the IVA payment then almost everyone will have a disposible income of more than £50.It would only be someone who was paying £120 before remortgage per month that would have only £50 disposible income left after remortgage.
Basically everyone will continue to pay until the 60 month mark
Or have I missed something ?
Regards

[MelanieGiles]

I agree Andy - and was actually thinking the same when I was typing up the response - which to be frank I had not thought through fully before when preparing my own clients proposals! Meant to tupe "unlikely" - sorry chaps and thanks to Andy for picking this up.

[olympic_torch]

Andy/Melanie
Does that mean that most people will be in IVA for 72 months?.
ie, an extra 12 payments instead of equity release.

[MelanieGiles]

No - the new protocol does not ask for an additional year's payments.

[northumbrian69]

This 4th year equity release clause is really confusing, my IVA states that I must seek a remortgage during the 4th year at which time the IP will seek to conclude the IVA.
Does the new protocol mean that I now have to wait until year 5 before I can remortgage and conclude my IVA.
Also will I only be obliged to seek a remortgage which has a maximum repayment level of 50% of my IVA repayments.
Every time I read about equity release the goalposts seem to move, can someone clarify the situation [?][?][?]

[Adam Davies]

Hi
The new protocol will only relate to new IVAs,from 1st Feb,so your own clause will remain and your IP may well conclude it after your remortgage in the fourth year
Regards

[Shining]

Meeting next Friday (8th) in month 54 of IVA I have to see a remortgage value x amount. Do I continue to pay the extra on the mortgage then and the IVA payment? or will my IVA cease once the remortgaged amount is handed over? Doesn't take much to confuse me!

[Adam Davies]

Hi
Your payments will continue but at a reduced amount[the extra that you pay for your remortgage will be deducted from your IVA payments]
Regards

[olympic_torch]

Melanie/Andy.
If all else fails, and i am unable to either raise or afford a remortgage, am i not then faced with an additional 12 months of contributions?

[Shining]

Thank you Andy