what equity to release

lookingforthelight

Hi everyone who is still awake.

Just a quickie, I think.

I understand in year 4 of an IVA they may ask you to release equity in your home.

Is this to pay the last year of IVA payments or to clear the actual remaining debt?

Thx

doelani

Equity release is normally in addition to your normal payments. Ours was 60 payments plus equity release at end of 5th year to pay back as much as possible of what we owed.

lookingforthelight

Hi,

Thanks - so its just a way of squeezing more out of you before the IVA ends.

I'd be surprised if anyone on an IVA could do equity release, what with defaults all over their credit file like a rash.

adfax

I am not sure if my IVA is typical or not. Mid-way through the final year - month 54 I think - I have to get a valuation. If the LTV is less than 85% then I have to try and release the equity up to 85%. If I am unable to increase the mortgage or get a secured loan to do this, then the IVA is extended by 12 months.

As you say, given the credit rating of anyone in an IVA it is likely to be extremely difficult to extend the borrowing.

There is also a clause that the increased mortgage payments resulting from releasing the equity cannot exceed 50% of the payments that I am currently making into the IVA.

On the other hand, if there is less than 15% equity (ie the LTV is greater than 85%) then there is no equity to release and the IVA ends at 60 months.

Given that I currently have severe negative equity - my LTV is well in excess of 125% - I doubt there will be any equity to be released in 4 years time (short of a miracle!).

doelani

lookingforthelight wrote: »

Hi,

Thanks - so its just a way of squeezing more out of you before the IVA ends.

I'd be surprised if anyone on an IVA could do equity release, what with defaults all over their credit file like a rash.

No it's a way of paying back as much as possible of what you owe.

It is possible to release equity, we did it 2 years ago to do a full and final and end our IVA after 3 years. Yes we had to get a subprime mortgage but we are still paying less per month thane when we where paying IVA and mortgage.

adfax

doelani wrote: »

It is possible to release equity, we did it 2 years ago to do a full and final and end our IVA after 3 years. Yes we had to get a subprime mortgage but we are still paying less per month thane when we where paying IVA and mortgage.

Two years ago the mortage market was very different to it is now - we moved two years ago and we were able to take our existing mortage and secured loan with us, even though we were in negative equity even then. Since then house prices have dropped, and it is more or less impossible to get someone to lend over 90% LTV - subprime or otherwise.

I think this is why - in my case at least - the LTV for releasing equity is set at 85%.

doelani

adfax wrote: »

Two years ago the mortage market was very different to it is now - we moved two years ago and we were able to take our existing mortage and secured loan with us, even though we were in negative equity even then. Since then house prices have dropped, and it is more or less impossible to get someone to lend over 90% LTV - subprime or otherwise.

I think this is why - in my case at least - the LTV for releasing equity is set at 85%.

When we remortgaged it was just as mortgage companies where pulling deals, to teh effect we had ours pulled 3 days before completions, luckily our broker was great and we got it sorted, higher rate and fees that we dd not have to do first mortgage deal.

Our LTV was 50% as we could not have afforded to repay any more which the IP had to take into account. I think our original IVA agreement set the equity release as 85% of available equity.

nolongerinthered

reading these thread worries me!

i am in an IVA that ends aug 2011. I dont own my own home and so have no equity. Will i be asked to find funds from somewhere when my IVA ends to provide my creditors with more money ?

doelani

nolongerinthered wrote: »

reading these thread worries me!

i am in an IVA that ends aug 2011. I dont own my own home and so have no equity. Will i be asked to find funds from somewhere when my IVA ends to provide my creditors with more money ?

No need to worry you only need to release equity if you own a a house and it is part of your IVA agreement.

You only provide extra money if it is written into your IVA agreement through 50% of overtime, equity, windfall's etc.

If you only have the payments that have been agreed that is all you pay.

nolongerinthered

phew! thanks for that.

one other question tho, im approaching year 4 of my IVA, i have never had a financial review or any contact from the IVA company, except when it was switched to a new company. Is this normal? When my IVA ends will i hear from them?

doelani

nolongerinthered wrote: »

phew! thanks for that.

one other question tho, im approaching year 4 of my IVA, i have never had a financial review or any contact from the IVA company, except when it was switched to a new company. Is this normal? When my IVA ends will i hear from them?

Usually a review is done anually.