I am at the stage of my IVA where they are looking at equity. Really confused...

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by sue792 » Sun Feb 11, 2018 11:37 am
I am at the stage of my IVA where they are looking at equity and if I will need to go and get a re mortgage. I know it may seem fairly simple to some people, I am getting really confused as have read conflicting stories. I am with Payplan. My current mortgage is £86,500 and the value of my property is about £103,000. I would say that means my LTV is 83.7% which I thought would then mean that it wouldn't have to re mortgage. Can you confirm if that is correct?

Thank you in advance.
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by Foggy » Sun Feb 11, 2018 12:25 pm
Different IPs do interpret tha calculation in different ways, but the Protocol method would be:

House value £103,000 x 85% = £87,550 less mortgage of £86,500 = equity of £1050 .... less than the £5k trigger amount. So the equity release clause isn't triggered and no extension should be applied.

Some IP's (incorrectly in my opinion) will do it this way:

House value £103,000 less mortgage = £16500. Therefore clause is triggered. They want you to release £16500 x 85% = £14,025. Probably unable to release equity so a 12 month extension will be applied.

Up until a couple of years ago everyone used the first method, which is the one often emebedded in proposals ( Annexe 6 or 7 of the Protocol), but then an avaricious IP decided on the latter interpretation, which others are picking up on. The clause is badly written and contradictory but can be interpreted either way --- however, because the first method is the one quoted in Protocol conditions, I believe that is the correct method and those who use the latter method do so only to line their own pockets and with no regard to the welfare of their clients.
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Shaun Vickery
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by Shaun Vickery » Tue Feb 13, 2018 11:45 am
Wherever we are involved in assessing ability to release equity we use the former method Foggy mentions.
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