equity release calculation????

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chrisA

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Post by chrisA » Fri Jul 18, 2014 8:47 pm
A lot of people are talking about equity release so I checked my policy, here's my question. My wife and myself are in parallel running iva's with a equity release clause of £5000 or more after 85% LTV then either equity release or 12 months extension. But as there are 2 iva's does this need to be £10000 or more after the 85% LTV.
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Struzzo39

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Post by Struzzo39 » Fri Jul 18, 2014 9:05 pm
We've just been having the same discussion Chris. Our remaining mortgage is 105,500 and according to zoopla our house is worth about 130,000 does that mean our iva will conclude at month 60? as 85%ltv is £124000. Thanks for your replys
Steven & Debbie
 
 

Foggy

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Post by Foggy » Fri Jul 18, 2014 9:07 pm
No. As I understand it any equity found to be available on the property is split 50/50 between you ( as you each have equal shares in ownership, assuming usual title provisions).

So, if there is, say £9500 equity, you have £4750 each -- therefore both deminimis.

That said, I believe some IPs take a different view, so best to check with yours.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
 
 

chrisA

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Post by chrisA » Fri Jul 18, 2014 9:10 pm
The way I read it is that whatever the 85% LTV on the value of the property is you then take out the outstanding balance and then what's less has to be £5000 or more, but if there are two iva's surely there needs to be a spare £10000 as each iva must show £5000 excess.
 
 

Struzzo39

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Post by Struzzo39 » Sat Jul 19, 2014 10:10 am
Hopefully one of tge professionals could just clarify this for us???. Thanks in advance
Steven & Debbie
 
 

esgt1967

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Post by esgt1967 » Sat Jul 19, 2014 2:18 pm
I'm not a professional(!) and the equity wording in your particular IVA might be different but my understanding is that you take 85% of the value, deduct any borrowings secured on property and then the remaining equity is shared, if you own the property jointly. Therefore, for above poster assuming property and mortgage are equally shared, if value of property is £130,000, 85% is £110,500 and you then deduct mortgage of £105,500 which leaves £5k equity. Therefore each person's share would be £2,500 and below the £5,000 de minimus so usually a 12 month extension would be applied.
 
 

Foggy

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Post by Foggy » Sat Jul 19, 2014 3:19 pm
Esgt --- in many arrangements if the equity is below £5000 the property is excluded form the arrangement and there is no extension.

Wording and interpretation of the clauses vary from arrangement to arrangement and from IP to IP!
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
 
 

Struzzo39

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Post by Struzzo39 » Sat Jul 19, 2014 5:46 pm
Thanks all. This is what we thought but just wanted to make sure that it was the case.
Steven & Debbie
 
 

chrisA

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Post by chrisA » Sat Jul 19, 2014 9:31 pm
Yes thanks for comments, my wording is " equity release or extension is required if there is £5000 or more available equity after the outstanding balance is taken from the 85% LTV otherwise the iva is considered complete on month 60.
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