Hi, sorry for the long Post, but I am so confused. I have recieved this from my IVA Company-'Following a review of your documents, I can confirm that available equity greater than £5,000 was identified in your property. However, you are not required to attempt to re-mortgage your property as your current secured borrowings already exceeds the 85% LTV maximum limit as stated in the terms of your arrangement'
As per the terms of your arrangement, where you are unable to obtain a re-mortgage, you must choose one of the following alternative proposals:
• a third party sum equivalent to 85% of the value of your interest in the property, calculated as £14,110.94; or
• 12 additional monthly contributions at £294.
Before I say yes to the extra payments.
Is this correct. I understood that if there was no available equity to re-mortgage that no further payments would be requested.
Mine had exactly the same clause. I sent in 3 independent valuations all showing about 5k equity and my Iva ended on time with no issues? Im sure one of the forum experts will respond soon with an acurate explanation
In some arrangements the equity is calculated without reference to an 85% limit, so this could well be correct. You need to study your wording to see exactly what it says ( and it isn't straightforward in some cases, with conflicting clauses).
Hopefully you have a reference to the method used in most, in annexe 6 or 7 of the Protocols, or, even more helpful, an example in the arrangement wording.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I agree this sounds confusing and potentially conflicting. You need to get your IP to explain why this is so as perhaps the modifications proposed by creditors have lead to the extension.
thank you for your replies, they were really helpful. I have read my agreement and it states that 'the term is 60 months with an additional 12 months in lieu, if the equity in the house is over £5000 but the debtor is unable to obtain a re-mortgage' (We have no equity to release). I'm going to email and ask them to explain.
I'll post the reply.
'Net worth is defined as ‘any asset owned minus any debt owed’. Our initial calculation is to determine whether or not there is available equity in your property. In your case, this was calculated as £14,110.94, therefore you must choose an alternative to a re-mortgage of your property as per the original terms of your arrangement'.
Valuation of the Property £160,127.00
Less Mortgage Redemption £112,315.71
Less Secured Loan 1 £25,605.74
Less Selling Costs (3.5%) £5,604.45
Equity Available in the Property £16,601.11
Less Partner's Share of the Property
Client's Available Equity £16,601.11
85% of Client's Interest £14,110.94
Release of Equity (Net Worth)
'Should you be able to obtain a re-mortgage, it must be to a maximum of 85% loan to value (LTV). Based on the figures provided by you, your current mortgage represents 86.13% LTV therefore exceeding the maximum limit of 85% LTV'.
I didn't realise that they could ask you to release net worth if there was no available equity at 85% LTV to release.
There are no modifications in the proposal regarding the house or equity.
I have been reading lots of posts, including yours Foggy on Apertures strange calculation method. As you can see from the above post this is what they have done with us. This calculation method is very different to the IVA protocol, and certainly different to the examples shown in our IVA agreement. If I am correct the calculation should be as follows:-
Value of property: £160,127.00
85% of debtors share of value: £136,107.94
Mortgage outstanding: £137,921.45
Maximum remortgage amount for IVA: -£1813.51
(this method taken from my IVA agreement)
would this put us in D Minus?
As you can probably tell I am quite stressed by this. We have been completely compliant with Aperture (previously Grant Thornton), to a point that when my daughter was diagnosed with complex epilepsy and required supervision we paid my nieces pocket money to look after her outside school to allow us to continue to pay the same amount a month rather than have to request a reduction in payment to pay for formal child care (this was agreed with aperture).
I appreciate that this is our debt and we have to pay as much back as possible via equity release, but the more I read, the more I think that Aperture's calculations are wrong and that we have no equity. They have already told us our LTV is over the 85%. Any advice will be very welcome.
Hi. I had the same wording as you and initially was asked to either remortgage for £22,000 or extend 12 months. I challenged the company on this because of the ambiguity in the wording in the proposal and most importantly the illustration shown. They backed down and agreed with me and my arrangement concluded after 60 months.
Hi both, thank you again. Great to have your input/experience footiemad. I am going to challenge! I will email them a copy of the examples and as Foggy has said I will ask them to review using the method that have shown on my documents. I'll post the result.
Hi Dori.n We had the same problem, we had IVA Protocol and agreement stated 85% LTV but IVA company worked ours out 85% net worth and that we had over £5000 equity. Not only did our agreement say 85% LTV but we had modification from KPMG stating equity had to be based on IVA Protocol (Annexe 6 or 7). Following advice from the experts here we challenged this due to the ambiguity in the wording and IVA company then agreed that we did not have equity. If it was not for the support from this site we would have been paying a further 12 months. So check paper work and challenge it & good luck.
Hi, Just to update you all. My challenge was upheld!! The company stated that they had taken legal advice regarding the calculations in Annexe 7 which is at odds with the wording of the policy, and the way they are now calculating has been agreed in law. However, because we had agreed our IVA using the Annexe 7 calculations they reviewed our case and, having found no equity our house has been excluded. Pending final review, our last payment should be Dec'16.
Thank you for all the advice nad posts that I have read. I have never really looked at forums before but this has been invaluable. We are looking forward to being able to 'breath' and starting off the New Year well.
The IVA has taught us some valuable lessons; it is not the 'easy way out' of debt and you have to really work hard at budgeting; you can live well without credit and within your means. Our children do not 'need' the material things that we thought made them happy. We now spend and enjoy more 'free' time together.
I would say that I will never have credit again, but know that to re-buid our credit after the 6th year we will probably have to take a credit card. I am confident we will manage this , and continue to live within out means.
That is excellent news Dori.n! Really pleased for you and at least you know the light at the end of the tunnel is well within reach!!
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Yes, their method might, in certain circumstances, be "legal", if not moral! However, they cannot employ any other method if the method has been agreed in the arrangement --- they simply cannot make it up as they go along !!
Anyway -- well done for sticking to your guns !
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
