Equity Release...Have I got this right?

Get expert opinion. This is the place for new questions to be posted.
13 posts Page 1 of 1
User avatar
Bradders
Posts: 204
Joined: Thu Nov 17, 2011 10:01 pm
by Bradders » Wed Apr 12, 2017 11:45 am
Hello all, well it's been a while and month 54 is here, so we're waiting for the written valuations to pop through the letter box. So I just want to check, in principle if I've got this right in my mind before I submit everything to GT. My wife and I are in an interlocking 2008 protocol compliant IVA.

So...absolute top valuation would be 199000 (I don't think it will be this high, probably nearer 190k)
85% LTV.............................................169150

Mortgage and RX1............................166000

Available equity..................................3150

If I read it right the first 5k equity would be ignored and IVA closed down at month 60, so in this case we'd be fine. Also, as we both have an (interlocking) IVA would there need to be 5k equity per IVA? In one of the examples given by RSM when they drafted the documents it showed 5k each and I still have that document. It shouldnt be important I guess, but just in case...
User avatar
Foggy
Forum Expert
Posts: 23238
Joined: Fri Dec 17, 2010 11:14 am
Contact
by Foggy » Wed Apr 12, 2017 11:52 am
Hi -- that document from RSM will be important because GT / Aperture work this out totally differently. They will do it this way:

Valuation 199,000
Mortgage 166,000

Equity 33,000 x 85% = 28,050

You can see why they use this methof if they can get away with it !

If they try it, challenge them and refer to the examples which form part of your agreement.
User avatar
Bradders
Posts: 204
Joined: Thu Nov 17, 2011 10:01 pm
by Bradders » Wed Apr 12, 2017 12:03 pm
Hey Foggy how are you doing?

OK, well that looks like a dodgy way of doing it! But Yes I can see how they could use that method to "create" equity.
Are they alone in doing this? It's been a while since I last checked in here but unless I've made errors the way I've described was the accepted way, wasn't it?

I'll submit the docs in the format I know and be prepared to challenge and produce the RSM docs that we signed up to.
Is there anything else I need to know?
User avatar
Foggy
Forum Expert
Posts: 23238
Joined: Fri Dec 17, 2010 11:14 am
Contact
by Foggy » Wed Apr 12, 2017 12:26 pm
I am not sure if they are alone in this approach, but they are certainly in a small minority. Yes, the method you use is the "norm" and is the method used in the Protocol examples ( annexe 6 or 7). It hinges on the wording used --- Equity based on 85% LTV is the method you have used, however, GT use the wording "85% of your share of the equity" and, to make matters worse, some proposals have conflicting clauses (and, of course, GT will home in on the one that supports their interpretation).
User avatar
Michelled0422
Posts: 93
Joined: Mon Sep 28, 2015 10:08 am
by Michelled0422 » Thu Apr 13, 2017 8:03 pm
Hi. I am waiting for my completion certificate from Aperture formally GT and I submitted my valuations and mortgage redemption in December 2016 and early January they wrote to me using their favourable calculation and there was more than £5,000 equity. I dug out my paperwork and low and behold there was a calculation in 2012 documentation using the calculation in my favour. I rang them up, challange their calculation and just over an hour later, they rang me back agreed with my challange and the additional equity 12 months was not added. Using my favoured calculation I was in nil equity. Check your paperwork carefully and don't be afraid to challange especially if you were with GT initially. Good luck
User avatar
Foggy
Forum Expert
Posts: 23238
Joined: Fri Dec 17, 2010 11:14 am
Contact
by Foggy » Thu Apr 13, 2017 8:17 pm
Michelled0422 wrote:
Hi. I am waiting for my completion certificate from Aperture formally GT and I submitted my valuations and mortgage redemption in December 2016 and early January they wrote to me using their favourable calculation and there was more than £5,000 equity. I dug out my paperwork and low and behold there was a calculation in 2012 documentation using the calculation in my favour. I rang them up, challange their calculation and just over an hour later, they rang me back agreed with my challange and the additional equity 12 months was not added. Using my favoured calculation I was in nil equity. Check your paperwork carefully and don't be afraid to challange especially if you were with GT initially. Good luck



Nice one ! :-)
User avatar
Bradders
Posts: 204
Joined: Thu Nov 17, 2011 10:01 pm
by Bradders » Fri Apr 14, 2017 12:58 pm
I've got my paperwork out and not only is the wording clear and explicit with examples using my method, but there is also and Outline of Debtors Options document between RSM and myself in which they've given 2 specific examples of how the 85% LTV works, one using a static house price and one allowing for 4% increase per year in house prices. Thank you RSM...the email will be sent over this weekend!
User avatar
Foggy
Forum Expert
Posts: 23238
Joined: Fri Dec 17, 2010 11:14 am
Contact
by Foggy » Fri Apr 14, 2017 1:04 pm
Bradders wrote:
I've got mtlyy paperwork out and not only is the wording clear and explicit with examples using my method, but there is also and Outline of Debtors Options document between RSM and myself in which they've given 2 specific examples of how the 85% LTV works, one using a static house price and one allowing for 4% increase per year in house prices. Thank you RSM...the email will be sent over this weekend!



That's good. To be fair I am guessing that the staff at GT / Aperture are merely applying their own, usual, criteria and are forgetting that many of their cases were acquired from other sources and, so, are drafted differently. They just need reminding now and again.

For anyone with equity release in their future it is vital to dig out those papers and learn your own conditions in this regard thoroughly, in case you, too, have to mount a challenge.
User avatar
Bradders
Posts: 204
Joined: Thu Nov 17, 2011 10:01 pm
by Bradders » Wed May 17, 2017 9:28 am
So I got a letter saying there was 10.5k equity in the property and can I either re mortgage or pay another year's contributions...so have been on the phone with them until the point that I got cut off. From what I can pick out of the conversation and having followed their calculation, they have worked out 85% of the value of the property, which works out at 161k, less the mortgage which is 150.5k, hence they get to 10.5k. But...they've ignored the secure charge of 15k against the property, which of course leaves no equity. In fairness to them I pointed out in my email to them that the secure charge was there and that it can be verified with the Land Registry, and I sent them something at the time of setting up the IVA with RSM, but I didn't send them proof with my documents this time, so I guess I'll need to get on to the housebuilder to get something. Am I able to get something from the Land Registry if that fails? I only ask because the builder isnt building any more so may not be inclined hunt paperwork, although at some point he will want the money back.

It seems therefore, that if I resolve the secure charge issue, they'll accept there is no equity, but lordy the waters get muddy on the phone :(
User avatar
Bradders
Posts: 204
Joined: Thu Nov 17, 2011 10:01 pm
by Bradders » Wed May 17, 2017 10:15 am
How would I get a copy of the PCIVA Guidelines 2010?

What they're saying now, is that one of the creditors put forward a modification which said "The equity should be dealt with in line with the PCIVA Guidelines and is only applicable if the equity is not realised within the first 12 months."

They say that means that they can use a calculation of house value less mortgage value/secure charge x 85% of the remainder, which will leave them with around 17k of equity.

Their view is that this means they disregard my IVA completely. I've asked for a meeting with my IP, they tell me it won't happen, so they're booking a call with the next level Supervisor.

I'd really appreciate some advice from an expert here.
User avatar
Foggy
Forum Expert
Posts: 23238
Joined: Fri Dec 17, 2010 11:14 am
Contact
by Foggy » Wed May 17, 2017 11:57 am
Hopefully an Industry Expert will pick up on this, but, for what it is worth, I think they are spouting bovine droppings, to manipulate the clause, unfairly, to their advantage --- they clearly intended to use the commonly accepted method of calculation and then back tracked when this wasn't to their liking! The Protocol guidelines for 2010 will refer to the correct calulation -- either by reference to annex 6 or 7 or by embedding a sample calculation in the proposal.

How often is equity released in the first 12 months when it is only considered in the final year ????

I would be looking at lodging a formal complaint.
User avatar
Bradders
Posts: 204
Joined: Thu Nov 17, 2011 10:01 pm
by Bradders » Fri May 19, 2017 7:05 pm
I raised it as a complaint, despite the customer service guy telling me I hadn't got a leg to stand on and being very reluctant to escalate it.
Got a phone call yesterday and went through my case, making absolutely sure that they realised that Annex 7 was the applicable document and that it referred specifically to my IVA. I followed up by email last night (and attached the secure charge document they needed) and by lunchtime today they'd emailed back to agree that I'm right and there's no available equity in the property! So...we got there in the end and I'm chuffed but at the same time, concerned that somebody else might receive their letter telling them they owe xx thousands and think it must be right so end up paying more money in an extended arrangement. Equally, the guy on the phone was insistent that I was completely wrong, to the point where it was obvious to me that he was trying to coerce me into saying I willingly agreed to their bogus calculation. I stood firm partly because I had read my IVA proposal thoroughly and I was confident, and partly because of advice from here, particularly Foggy, reassuring me that I was right and pointing me in the right direction. Cheers Foggy!

A bottle of bubbles is about to be consumed...we make it only 2.5 months of payments left :D
User avatar
Foggy
Forum Expert
Posts: 23238
Joined: Fri Dec 17, 2010 11:14 am
Contact
by Foggy » Fri May 19, 2017 7:17 pm
Well done for standing your ground, Bradders !

I share your concerns regarding the number of people who get coerced into paying money they do not have to.

Enjoy that bubbly -- well deserved :-)
13 posts Page 1 of 1
Return to “Ask IVA Forum and Industry experts”

Who is online

Users browsing this forum: kallis3, Lincolnshire123 and 4 guests