Hi - would really appreciate some advice - as have an IVA proposal in place. However, reading through the forms the Equity clause is very concerning.
Our house is valued at approx 90k now with a 91k mortgage. The IVA is in my name only for my unsecured debts and I've been assured that the equity clause relates to "my share only".
What worries me is the clause that states in month 54 a re-mortgage is done. If that valuation shows that 85% of my interest in the property exceeds 5k then I would need to take out a re-mortgage.
The company has assured me that this is not likely to be called upon - however, my view is that in 5 years prices would rise so that my share would be more than 5k - and I would then have to take out a re-mortgage over another 25 years and pay into the arrangement.
With the mortgage scheduled to be at approx 87k at the end of 2013 and less when the IVA expires house prices would not need to increase to much more to exceed the 5k threshold.
The IVA company has said "IF" I get a mortgage as I appreciate that I will struggle to get a deal at the end of the IVA and they would consider "if" to include a high rate sub-prime mortgage. However, that is not documented in the clause.
I have to say that your understanding of the standard equity release provision in your IVA proposal is very good - and it is pleasing to see that you are starting to think about the implications of this at an early stage.
Your IP will I am sure have discussed all scenarios with you at the time the proposals were presented, but no-one can give you guarantees as to what will happen in five years time. I suspect that your IP - like most of us - is preducting that it will still be very difficult for anyone in an IVA to obtain a further advance on their mortgage to fund the equity release, in which case you will probably be required to extend the term for up to a further year to address this notional gain.
Keep an eye on the markets, I would get a revaluation done at the end of the third year just so you can see how things are moving with regard to the property.
I would think that it will be very unlikely that you will be able to remortgage and raise any funds.More likely that your IVA will extend by one year.
If you do have to remortgage there are safeguards built in where the extra cost of the mortgage will not be any higher than 50% of your IVA payment at the time