www.iva.co.uk

Hi, I'm approaching month 54 so dug out my original IVA paperwork as I wanted to be clear on what is expected regarding equity release.

My Chairmans Report states:

"6 months prior to the end of the IVA I shall obtain 2 offers of remortgage from reputable brokers in an attempt to release my equity. The offer that I will accept will be based on a maximum 85% loan to value and the incremental cost of the remortgage will not exceed 50% of the monthly contribution I will be paying at the time. In any event any remortgage that I am required to undertake will not exceed 100% of the debt outstanding at that time. Any costs in relation to such remortgage will be deducted from the mortgage proceeds and any increase in the monthly payments will be deducted from my contribution. If the increased cost of the mortgage leads to dividends to creditors falling below £50 per month after fees, contributions may be stopped and the IVA deemed satisfied.

In my attached outcome statement I have included an amount of 85% of my future interest, by taking the current value of the property and inflating this by 4% per annum, to give an indication of 85% of my interest in the property at month 54, I estimate the amount is unknown. This figure is just for illustration and it will not be deemed a failure of my arrangement if the equity I am able to release is less due to the fact that property prices do not rise as indicated here. If I am unable to obtain an offer of remortgage I shall make 12 additional payments into the arrangement ie 72 contributions by way of compensation to creditors. If at the time I obtain the offers of remortgage the amount of equity available is £5000 or less this does not have to be released and I will not be required to make contributions additional to those otherwise disclosed in this proposal"

So can I assume by the above I can use the 85% LTV formula to work out if any equity is to be released once I have a valuation and mortgage redemption statement to work it out?

Is there anything else I should be aware of?

Just trying to be proactive and not waiting into month 54 before trying to make sense of what's required.

Thanks in advance guys!

Hi

Yes, obtain a current valuation then multiply by .85, this is the amount to be considered less your existing mortgage/secured loan

Do you know at this point how much this could be ?

Regards

Thanks for your reply Andy.

No, not sure if the figures yet, as long as i know the formula to use I should be fine.

Is there anything else in the text that I should look out for or does it seem pretty straightforward to you?

I would just add that you should keep an eye on your IP as some still interpret identical clauses according to their own agenda. If they do not calculate it as above then ask them to explain their method and why it differs from your proposal.

Thanks for your reply Foggy.

What you've mentioned is sort of what I'm concerned about which is why I posted the whole section in my Chairmans a Report, I suppose I'm anticipating the possibility of a problem especially as i think there may hopefully be no equity to release!

Hi

Your wording seems protocol compliant so I see no problems with interpretation

Keep us all updated on progress

Regards

Thanks again Andy, I was hoping you would say that, I'll certainly keep you updated once the valuation and redemption statement has arrived!

Hi,

When people talk about getting a valuation from a local estate agent what happens?

Do they come and have a look around the property then verbally give the valuation or do they give a written valuation which I guess I would need to send in to my IP together with my mortgage redemption statement?

They will come and have a look around -- then will give you a verbal valuation, which you should try to get in writing -- many agents will do this, many won't ! If you are close to the de minimis levels (i.e extension or not) it is worth paying for a valuation, which they will give you in writing.

Thanks Foggy,

So I guess I'll contact a few local agents and see if any are prepared to give a written valuation for free or not?

You can try this avenue but agents will value at market value normally at the upper end. They will then pester you thinking you are a prospective seller. I am close to the equity 85% LTV level so arranged my own valuation through local chartered surveyor. Most charge £100 + VAT for this which I will try to recover from IVA. As foggy says if your close - this avenue is the best option.

After all this effort on the day I was sending my own valuation off I received letter from my IVA firm saying they have requested a valuation of their own!. So best checking with your I.P if they are doing one. Some do, some don't. Good luck!. I'll find out this week if they will accept my figures!.

What's the likely value of your house? And do you know mortgage outstanding. You should be able to work out rough figures based on 85% LTV ratio.

Thanks Winter Blues,

I'll update the thread on my experience in due course!

Valuation around £75,000
Mortgage around £58,000
Secured loan around £8000