Equity Release

[puzzlellie]

Hi there,

Can anyone help me on how the equity release works please? I am only in the initial stages and have not yet had my valuation done. At this stage I would estimate my house is worth £145 - £150k and there is currently a mortgage and secured loan totalling £134k (leaving a total equity of around £11-£16k). My half of this would obviously only be £5.5 - £8k).

At the 4 year stage (which I believe is the equity release stage), would I be expected to gain a further valuation and obtain the my full half of the equity or is the value they expect you to release agreed at the first creditors meeting?

Thanks to anyone who can throw some light on this.

Regards
Px

[rockstarloz]

Hi puzzle. In my IVA terms the equity has to be over 5000. If its not I don't have to release the equity.

[plasticdaft]

Hi puzzle. In my IVA terms the equity has to be over 5000. If its not I don't have to release the equity.

does your iva run on for 12 months if you cannot release equity??

[indebtforever]

mine is set at £1,025 so i will be trying to save this so i will not have to remortgage

[plasticdaft]

mine is set at £1,025 so i will be trying to save this so i will not have to remortgage

Can you run your iva on for a couple of months to pay that figure off??

[indebtforever]

yes i suppose i could ask for that but i have only been kept going by the thought of it finishing on that magic 60th month[:D]

[kallis3]

Your house will be revalued in month 54. Providing the equity is over the limit set by your IP (mine is £5000), you will be expected to try and remortgage, usually up to 85% LTV.

If you cannot get a remortgage, or the extra repayments on the mortgatge are over 50% of your IVA payments, then you will probably be expected to carry on for another 12 months.

Indebt, do you not have to try and remortgage in Year 4? If so, you will possible find (taking into account the economic conditions at the time), that your equity will be more than £1025.

[indebtforever]

i have read the report mine is in the 5th year and the figure is actually set it wont go up any i just have to find the exact amount in year 5

[kallis3]

You're right - it's in month 54 which is obviously the 5th year!

You are lucky that yours is set in stone. Wish ours was! We already have more than £10,000 between us in equity, and this will obviously go up as the mortgage comes down. We probably won't get a remortgage due to our ages (he's an old git and I'm not far behind!), so mine will probably continue for a further 12 months.

[puzzlellie]

Hi,

Thanks all. I suppose it's better to try and get a 'set' figure on that basis then?

I am sorry if this seems like a stupid question, but do you actually have to remortgage for the equity value or can you raise the funds in other ways (i.e. a family loan or similar)?

Also, I have been advised by a member in Scotland that their house valuation fees were included in the IVA fees. Is this the same for us in England or do we have the pay for the valuation ourselves? I have been looking around and they all seem to be around the £150 - £175 mark which seems really high for something that will take 5 minutes.

Thanks again
P

[kallis3]

No, you won't have to pay for the valuation, the creditors cough up for that.

Not sure about the equity bit. Melanie will be able to answer this if she reads the post.

[indebtforever]

the creditors are just after the funds and fees would be saved if you knew how much equity there was i am sure they would accept it from another source

[MelanieGiles]

It is a question that you really need to ask your IP, as there is no consistent answer. If your IP uses the IVA protocol, as I do in my practice, the property will need to be revalued in month 54 and equity raised subject to a maximum loan to value level of 85%. There is a £5,000 deminimis level, but a number of creditors are now seeking to remove this by way of specific modification - which goes against the spirit of the protocol and is currently under review.

If your IP does not use the IVA protocol, the above requirements are likely to be modified into the proposal in any case.

Using your own figures of £150k and £134k - 85% of £150k is £127k - so you would not need to raise anything - however your property is likely to appreciate over the next four and a half years.