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Please excuse my rambling but it is a complicated situation and I'm really worried about what will happen.

I'm in the 4th year of my IVA and I have to remortgage to release £15000 of equity in my property. It doesn't sound a lot but that is because it's a shared ownership house and I only have a mortgage on 25%.
The problem I'm finding is that none of the lenders I've approached are interested because it's such a small amount for a remortgage and it's a shared ownership.

I've been in touch with Who's Lending who tried everywhere to find me a remortgage, but no luck because of the 2 reasons I've already mentioned. They were really helpful and the advisor I've been dealing with has offered to speak to my IP to confirm all the problems I am having in remortgaging and that it is highly unlikely I will be able to do so.

I also tried Pink Home Loans. They actually came back to me really quickly and said that the remortgage should have NEVER been a condition of my IVA, as you CANNOT remortgage a shared ownership property for debt consolidation, only for buying further shares in a property.
Has anyone else ever come across this situation? And does anyone know if what Pink are telling me is actually true? If it is it's ridiculous that remortgaging was a condition of my IVA, but what do I do about it?

I didn't want equity release to be a condition of my IVA simply due to the complication of it being a shared ownership property but my IP insisted on it to get the IVA aproved by my creditors, so I had no choice. The initial equity release on the proposal was for £10000 but when the IVA was aproved the amount was modified to £15000 or to extend the IVA for a 6th year to pay an equivalent amount into my IVA which is impossible as the monthly payments would be far more than I could ever afford.
Can anyone please advise on what is likely to happen[?]

Hello IVA 2003,

I have yet to see a shared ownership scheme where you can remortgage for a purpose other than buying a greater share of the property. I think that your broker is right and although it was quite a while ago for you I suspect that your IP missed this technical point as opposed to insisting that the clause went in to the IVA to make it more attractive to creditors.

The position might not be as bad as you think but it depends upon the precise wording of the remortgage clause and whether there were modifications that might have insisted that you pay a minimum dividend.

If the remortgage clause that you have requires you to get a number of mortgage offers and accept the one that releases the most to creditors then, subject to the wording, there may not be a problem provided that you do try to get a mortgage offer and you provide evidence of that fact to your supervisor, even if that means that you cannot get an offer,ie you've done your best.

So, have a look at your proposal (and modifications) and carefully read the remortgage clause to understand what are your responsibilties. In addition check that there isn't a minimum dividend modification but, if there is, look at the statement of affairs to understand where the money was expected to come from to pay the minimum dividend.

Hope that helps but please ask again once you've looked at your proposal.

IPs should always beware encouraging clients to make offers of equity release on shared ownership properties, because as Catallus has already highlighted this is nigh impossible. You may be able to get a secured loan, however, which is not an ideal solution but could enable you to comply with the IVA terms.

I suggest that you now discuss this matter with your IP directly, and ask them to explain why this was not considered at the time the proposal was formulated.

If you are unable to raise any funds at all, it is unlikely that your IVA will fail - perhaps your IP could put forward a variation enabling you to make additional contributions in lieu of the equity, given the circumstances.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Hi
It would be grossly unfair if IVA2003,s IVA failed because of the equity release clause.
Lets hope that common sense prevails and contributions can be extended by a year to compensate
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp