Equity release - Aperture

[Chief77]

Hi,

Hopping you can help as im due to call Aperture tomorrow regarding equity release

Original IVA in September 2013 was through DFD for 72 months rather than the ‘usual’ 60.

The equity release wording is as follows;

“If that valuation shows that 85% of my interest in the property (after deducting my share of the mortgage and/or secured loans referred to above) is less than £5,000 (net of all costs to take out a new mortgage) then I need contribute no more to the arrangement in respect of the property.“

The agreement shows property value of £142800 and secured lending of £137366 (‘equity' of £5434). Note the mortgage is interest only so hasn’t decreased since taking the IVA.

My assumption is that based on current value of £165000; 85% of (£140250) minus mortgage is £2884; therefore, less than £5000 and no more to pay, IVA ends?

I believe Aperture will try and calculate as;

£165000-£140250=£24750
£24750 * 0.85= £21037.50

And therefore, request remortgage or additional 12 months (£140 per month IVA contributions)

Few queries;

1) My ‘Estimated outcome Statement’ regarding property has figure of £1488 for a Voluntary Arrangement referencing notes of “Based on 85% of the amount of equity estimated to be available in the final year of the Arrangement less secured borrowings. Estimate of interest to be realised based on 4% growth per annum and no reduction in secured borrowing

I cannot see how this figure has been calculated and if understood would possibly provide evidence to challenge the way Aperture are likely to calculate their equity release formula?

2) Having nearly been in the IVA for 6 years I want this over with ASAP. I am also aware that Aperture are extremely slow in providing completion certificates so worst case, and to get my credit on the mend soonest can I if they push for their formula, offer 12 months in a lump sum gifted from family immediately so that by the time by IVA was due to finish (Sep 19) I shouldn’t be too far away from receiving a completion certificate, avoiding waiting until September, then offering all 12 additional months, then awaiting completion certificate which could take into 2020?

Would really appreciate your comments?

[Foggy]

Unless the proposal actually refers to annex 6 or 7 (which sets out the 'standard' and usually employed method of calculation, Aperture will stubbornly stick to their own perverse method of calculation.

Your idea of cutting wasted time short by offering the lump sum is valid. However, Aperture will, in all probability push for equity release to be looked at, this often runs into the extension period before you even know if you are going to extend ! This will scupper your plans.

As regards your ‘Estimated outcome Statement’ --- they key word here is "Estimated" ! And I think that is what they will fall back on ---- 'It is an estimated outcome' --- in reality all bets are off!

[Chief77]

Thanks Foggy - will discuss with them tomorrow. Clearly last thing I want to do is remortgage. Given equity I have and being in an iva, is it usual that a remortgage will be accepted or is it more than likely to get a 12 month extension. I've also only been with new employers for 6 months which I guess wont help any mortgage applicaton?

[Foggy]

Investigations into equity release are often conducted by a firm called The Select Partnership, who, fortunately are very even handed and fair with the process. They may well present the opportunity for a secured loan, sometimes combined with early release, which, unless you are under post 2014 terms, you are not obliged to take up -- but I have seen instances where it has been a beneficial offer.

[Chief77]

Thanks. I'm pre 2014 but had read about that previously. Lastly (apologies, and very grateful of your input so far), should I be requested to remortgage, my agreement states if I have over 5k equity...
"The amount that I have to borrow and pay into the arrnagement is subject to the following limits

1. (Most importantly) The remortgage amount will be a maximum of 85% of my loan to value"

I'm probably stating the obvious here but assuming current valuation of 165k (probably on high side) 85% of is approx 140k. So maximum I can remortgage for is this 140k? giving approx 2700 to be paid.back into the iva for it to end? (current mortgage £137366). Have I interpreted this correctly?

If so, I would probably rather remortgage for this figure, end the iva asap and not have to worry family and asking for money to f+f early?

I guess my next question is if property gets valued at £155000 and I need to remortgage, 85% ltv on above term is £131750 which is less than my current mortgage so would be nothing to pay in?

Getting more confused the more I look into this, am I reading the above term correctly?

[Foggy]

This is how I would read it.

Remember that to remortgage you will be replacing the current motgage, as well as the extra due to the IVA, at higher than optimum interest rates (which is one reason that Select often add in the secured loan option --- as it is only the new amount which would be at higher rates.

Also, assuming you have the standard limitation clauses, your new repayment cannot be more than your current repayment plus 50% of your IVA payment -- which sometimes limits the amount able to be released.

[Chief77]

Thanks Foggy. My current mortgage is interest only. Would a remortgage also be interest only or repayment?

[Foggy]

Thanks Foggy. My current mortgage is interest only. Would a remortgage also be interest only or repayment?

It would depend what was available at the time. I think a repayment mortgage would push you towards, if not over, the repayment limits.

[Malcolm.w]

Mine started in 2011 so probably same wording.

They will work it out the worst possible way and I challenged this and lost.

I believe they will ask for two valuations and use the average but get more done and simply provide the two valuations that are most beneficial to you.

They will also need to take into account 3.5% selling costs which is deducted from the available equity. So that will be over £5k they can't get their hands on.

If you have a joint mortgage and your partner is not in the IVA then they are only entitled to your share of the equity i.e. 50% of the total.

I took out a loan to avoid an extra 12 months of total misery being forced to deal with Aperture.

Good luck

[Chief77]

Thanks Malcolm - appreciated...

So, I have spoken with Aperture this morning and asked where things were with the equity release (before even starting to discuss calculation methods) and they advised that it was referred over to the Select Partnership in November 2018 and are awaiting the outcome which they haven't received so will escalate..

To get things moving I asked if I could speak with Select directly which they gave me the number and then after calling them, Select advised that the equity release was reviewed by them within two months ( latest Jan 19) and passed back to Aperture advising 'they are unable to assist' with regard to the equity release clause as no suitable products. They will reconfirm this to Aperture today and once confirmed will also email me so that I have a record of this communication back to Aperture being completed/accepted..

So, looks like remortgage is now off the table. Likely scenario is that once I receive confirmation this has been communicated back to Aperture I can then call/email them additional 12 months as lump sum as per my earlier post as gift from family member. Now I hope that by the time this happens and assuming 3 months for a creditors meeting, we will be towards the end of my agreement (month 72 and final original agreement payment being Aug 19), meaning that I could end up with a completion certificate if all accepted by the end of 2019 if all goes well. Does this look reasonable?

I have read other posts saying may as well continue for 12 additional months etc but after 6 years, even the possibility of saving 6 months, let alone 12 is a huge difference.

[Malcolm.w]

Hi
In desperation I used Sprout loans who despite my initial misgivings actually turned out to be very good and easy to deal with.

[Chief77]

Thanks - I guess before jumping the gun I need to know why they couldn't help me re the equity release clause. Should it be insufficient equity then my iva will end in August without having to offer the additional 12 months as a lump sum.

[Foggy]

Have a chat with Shaun -- he is from Select : memberlist.php?mode=viewprofile&u=22837

[Chief77]

Thanks - will do..
Malcolm, as you were also with aperture, and reading about the sprout loan and so I understand fully. Can you let me know how long from initial application it took to get the loan agreed with creditors and aperture? The positives I read about this option (correct me if I'm wrong) is that as soon as approved you are removed from the insolvency register? That's quite a positive if have to pay additional 13 months, await completion certificate up to 6 months, then further 3 months to be removed from the register.
Also, should you come into a windfall during the loan you can pay off in full at any time to be completely debt free and you get the added benefit of a loan managed well on your credit file?

[kallis3]

You'll remain on the Insolvency Register for 3 months after you receive your completion letter regardless