www.iva.co.uk

HI,
Just a quick question, I am coming up to my 54th month in my IVA and have to provide a valuation for my property, current market value is 82,503 and my current redemption is 77,000, will this mean I will have another 12 months added to my current IVA that is due to complete in September of this year. I would appreciate some assistance in this matter, thanks for your time.

The answer will be within your paperwork. What does it say will be needed if no equity available?

Paul

If you have a standard protocol IVA it should cease but as Paul says it depends on what your own proposal says.

Hi

Very likely that you will have to extend, however as you have no equity available based on 85% LTV there is a chance your IVA will just conclude at the end of year five

Regards

Hi what is the standard protocol?
I have this on my paperwork
Where i am unable to remortgage the iva should instead be extended by up to 12 months.
The amount of equity to be released will be based upon affordability from income and will leave me with at least 15% of the equity in the property. Where it is appropriate to remortgage the property through a repayment mortgage as opposed to interest only, the specific limits will be.
Remortgage would be to a maximum of 85% loan to value
The incremental cost of the remortgage will not exceed 50% of the monthly contribution.
There will be a cap on the total equity release to no exceed 100% of the remaining outstanding debt.

If the amount of equity available in the home at month 54 is under £5000, it does not have to be released, and would be no adjustment to the iva term.

The costs of remortgaging to release equity should be deducted from the mortgage proceeds and the monthly payments deducted from the contribution. If the increased cost of the mortgage means that dividends to creditors fall below £50 per month after fees, monthly contributions are stopped, and the iva is concluded.
Is this a standard protocol?

Yes, that accords with the current protocol ( up to the introduction of the 2014 Protocol).

foggey - very good point! I have in front of me the "new" terms proposed by DFD! Do you understand how this changes? I cannot see me having the 5k equity as the house in my name and my wifes. so any equity is split. Does the 2014 protocol change this? Its not mentioned the in the new book DFD have sent through

I haven't yet studied the new protocol terms, but the gist regarding equity release centres around the introduction of raising equity by means of a secured loan if remortgage is a non-runner.

DFD have been pressing clients to do this recently, ahead of the new protocol, and many have successfully resisted. Of course the new protocol changes this.

I understand that, in some cases, this secured loan route might be the better option and that the number of homeowners who will currently be caught by this is low, due to the current house valuations being close on break even against mortgage balances. This will, probably, change as prices increase and we will start to see many more releasing equity, one way or the other, as opposed to those getting the extension.