Thank you in advance.
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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