Hello, I would like to understand the equity release clause as I am in year 5 of my IVA. Is it maximum 85% of my property value or 85% of my net worth / equity if above £5k? I owe £208k and value property is £240k so I have £32k equity but this is 86% LTV. I am told that I must pay further 12 months as £32k is above the £5k demis amount. Thank you for your help.
Michael
Hi Micheal -- how equity is calculated depends upon the exact clause you have as well as your IP's interpretation ( some are conflicting).
Usually it is calculated thus:
Full Market Value = £240,000
x 85% = £204,000
Outstanding secured lending = £208,000
Therefore equity = - 4,000
Aperture ( for one) do it this way:
Full Market Value = £240,000
Outstanding secured lending = £208,000
Equity = £32,000
x 85% = £27,200
Does your paperwork have an example of the proposed calculation method -- either in the body of the proposal or by reference to annexe 6 or 7 of the Protocol ? If it does they have to use that method, which is usually the first example above and the equity clause would not be triggered, being de minimis.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Some proposals or modifications state 85% of your 'interest' is to be introduced so if this is the case the IVA would need to be extended. If as Foggy says your IVA is a standard unmodified protocol proposal then the extension may be unwarranted.
