Equity release and paying back all debt plus

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Topcat

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Post by Topcat » Fri Feb 07, 2020 6:11 am
Hi. I’m at the point of equity release in my IVA. However due to wage and payment increases, I have nearly paid back 100% of my debt. Payplan suggesting I’ll need to release equity for fees AND interest charges taking me way over original balance. This correct?

luluj

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Post by luluj » Fri Feb 07, 2020 6:21 am
You will always owe your full original debt, plus IP fees and statutory interest.

You will only stop paying when this has been met or the term of your iva comes to an end.

If you have the equity release clause, then yes they can ask you to still release money to meet this requirement.

You could ask your IP to propose to creditors to exclude the statutory interest and to accept payment to date, but it would be at their discretion.
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Foggy

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Post by Foggy » Fri Feb 07, 2020 7:48 am
I believe, and Lisa will correct me if I am wrong, funds released from equity cannot be put towards the statutory interest element. However, your regular payments can, until the agreed term ends.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
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Topcat

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Post by Topcat » Fri Feb 07, 2020 7:50 am
Thanks, some really great support here. Out of interest, what is ‘statuary Interest’? Is that an agreed rate or something? And how is it worked out?

Foggy

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Post by Foggy » Fri Feb 07, 2020 7:57 am
Statutory interest is calculated at 8% per annum simple interest -- it is a rate set by Government.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Lisa Thomas

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Post by Lisa Thomas » Fri Feb 07, 2020 10:08 am
Fri Feb 07, 2020 7:48 amFoggy wrote:
I believe, and Lisa will correct me if I am wrong, funds released from equity cannot be put towards the statutory interest element. However, your regular payments can, until the agreed term ends.
Foggy this is not something I have heard of. I have checked the last Standard Protocol T's & C's and cannot see any mention of this.

Perhaps one of the other experts on here will know something about this.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

Lisa Thomas

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Post by Lisa Thomas » Fri Feb 07, 2020 10:08 am
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

Foggy

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Post by Foggy » Fri Feb 07, 2020 10:44 am
Lisa -- Annex 6 (page 22) contains the following:

*The remortgage amount will be a maximum of 85% of my loan to value (LTV).
*The incremental cost of the remortgage, including cost of any new repayment vehicle, will not exceed 50% of the monthly contribution at the review date.
*The net worth released will not exceed 100p in the £ excluding statutory interest.
*The remortgage term does not extend beyond the later of my State retirement age or the existing mortgage term.
*The amount of the money introduced into the arrangementwill be the mortgage proceeds less the costs of the remortgage, including any costs to redeemany existing mortgage and/or secured loan.
*The increased amount that I have to pay because of the remortgage will be deducted from the remaining monthly contributions in the arrangement.
*If the increased amount that I have to pay at any time following theremortgage means that the required contribution to the arrangement falls below £50 per month, monthly contributions are stopped, and the IVA is concluded.


Maybe my interpretation is incorrect.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Lisa Thomas

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Post by Lisa Thomas » Fri Feb 07, 2020 11:18 am
It is a bit ambiguous.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

Topcat

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Post by Topcat » Fri Feb 07, 2020 11:28 am
Interesting debate and be good to hear from anyone having experienced the issue. Out of interest, I was advised initially by PayPlan to opt for Iva instead of DMP because of the fact interest being accrued could not be guaranteed with DMP. Interest would not be added under Iva. Now there is potential for 8% to be added, somewhere, on what figure I am not exactly sure. My fees are also £11k. I’m in a joint with my wife whose costs are also £11k. That’s £22k, on top of full repayment, and poss 8% interest too. It feels very unfair and almost poor advice initially? :(

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Post by Foggy » Fri Feb 07, 2020 11:40 am
Fri Feb 07, 2020 11:28 amTopcat wrote:
Interesting debate and be good to hear from anyone having experienced the issue. Out of interest, I was advised initially by PayPlan to opt for Iva instead of DMP because of the fact interest being accrued could not be guaranteed with DMP. Interest would not be added under Iva. Now there is potential for 8% to be added, somewhere, on what figure I am not exactly sure. My fees are also £11k. I’m in a joint with my wife whose costs are also £11k. That’s £22k, on top of full repayment, and poss 8% interest too. It feels very unfair and almost poor advice initially? :(
The 8% is based on the original debt and is calculated, in simple interest, on a daily basis on the reducing debt balance. In most cases the IVA comes to it's natural conclusion long before the question of paying back fees and statutory interest arises, with the majority of those in an IVA getting a portion of the original debt written off. Even if you do manage to repay 100% of the original debt and start paying off fees and interest, this is likely to be far less than the contractual interest on the debts.

I have to say that the way an IVA is presented is misleading in that they should say contractual interest is frozen and not 'sell' the concept -- as they do -- on the basis of "writing off up to 75% of your debt". It should be along the lines of "Paying back as much as you can afford" --- but then affordability is open to interpretation as well !

Judging by the questions we get repeated on here, many firms are also very economical with their explanations as to the whole arrangement when setting it up.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Foggy

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Post by Foggy » Fri Feb 07, 2020 11:41 am
Fri Feb 07, 2020 11:18 amLisa Thomas wrote:
It is a bit ambiguous.
As is much of the whole thing !
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Lisa Thomas

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Post by Lisa Thomas » Fri Feb 07, 2020 2:52 pm
No comment...!
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

Debtfreewannabe2022

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Post by Debtfreewannabe2022 » Sun Feb 09, 2020 4:38 pm
Hi all, new to this forum but wish I had see this site before signing up for an IVA!

Lisa Thomas, have you managed to get a definitive view from your knowledgable network regarding Foggy‘s post relating to ‘excluding statutory interest’ when trying to release equity clause funds? I think clarity would be most helpful.

Great forum by the way!

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Post by Lisa Thomas » Tue Feb 11, 2020 11:06 am
I have put some feelers out and will update the forum if I have anything to add.

In this case it's probably best for OP to ask their Supervisor about it, given they are telling OP their remortgage needs to include the interest.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk
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