advise please, 4years 9 months in!

bluecatblue

hi i have had my IVA for 4 years and 9 months was due to finish in january but in lieu of car that i needed to keep, i have to pay an extra 6 payments, which is not a problem. i have contacted my provider today who said that i need to release equity in my house or i will have to pay an extra year! is this correct, my iva was transferred at the start of the year to grant thornton and they never told us the time had come to do this back in march, they said sorry due to transferring must have got lost! the problem is how can you release equity by remortaging when i cannot even get a debit card and have the worst credit rating in history! my current mortgage provider said not a chance! does anyone know of any company that deals with IVA's i feel really down so close to the end now this!

adfax

Hi

Sorry to hear you are so near to the end and you have had this 'bolt from the blue'.

However, it is quite normal for you to have to release equity in your property, or pay an extra 12 months in lieu of this.

But it depends on how much equity you have - you are only expected to borrow up to 85% LTV - ie. you will not be asked to increase your borrowing to more than 85% of the value of your house. If at this point your share of the equity is less than £5000 then you will not be expected to release it.

There are also various conditions regarding how much any remortgage can increase your repayments and for how long.

You need to read the small print of your agreement - this should be explained in there.

Good luck.

kns_2

If there is no equity it will end on year 5. Do you have any equity?

bluecatblue

kns wrote: »

If there is no equity it will end on year 5. Do you have any equity?

not reaaly sure, my house is worth about £120,000 my outstanding mortgage is £89,000, with both mine and my husbands earning we can borrow about £112,000, but who would lend us the money, we cannot get any credit! thanks for all your advice.

wicket_2

Hi,
We're 6 months into our IVA, and we have to try for release equality / borrow an additional sum at the end of the 5 years, but if unable to do so will have to pay an additional 12 months.
So what they are asking sound 'normal' but you should have been told about it / or it should be in the small print.
Hope this helps

Charco_2

As said above, it's normal to have to release equity, and as also mentioned this should have been addressed with you before now... however, you are where you are so you'll need to deal with it!

You need to get a realistic valuation of the property... the lower the better! You say the house is worth £120k - is that accurate in today's climate?
Your outstanding mortgage is £89,000.

Multiply the value of your home by 0.85 (120,000 x 0.85 = 102,000)
The most you reasonably realise through a remortgage is £102,000 so realisitically you have £13,000 of realisable equity (if your home was worth only £110,000 on the open market this would decrease to £4,500... so you see how important it is to have an accurate valuation)

You can address this equity in a number of ways

1. Loan from friend or family member. If you were working on the principle of £13,000 equity but a friend offered you £7,000, you could offer this instead and your crdiotrs might accept it!

2. Remortgage: you'll have to get as much equity out as you can... working on 85% LTV, this is £13k but you may not be able to realise all of this... most lenders are not actually lending now (good credit rating or bad) so as long as you can show that you tried then your IP may just have to accept that and let you address it in another way (Remortgageing is the WORST way to address equity because you'll be paying for it for years to come but sometimes it's unavoidable)

3. IVA Extension: It's disappointing I know but if you HAVE TO ADDRESS EQUITY it is the best way to go. You've tried other avenues, or you have less than £5k equity it's not worth making you dramatically overhaul your finances so just continue the payments you've been making and call it quits after another year... usually 12 months payments will still be less than the amount of equity you'd be expected to address.

Ivorydawn

Charco - Thank you for an excellent explanation, we are at this very stage, 4Yrs 8 Months in an IVA and we have no Realisable equity. The situation has been discussed with our IP and due to increases in our payments the expected dividend has increased considerably, a meeting has been called for early december proposing to end the arrangement at end of year five. fingers crossed!!

Original Poster - The equity release element will be in your original proposal or, more likely, as a variation proposed by your creditors at the original creditors meeting.

You need to read the equity release sections carefully and discuss these with your IP. Charco's advice above is a very good start for you. There is light at the end of the tunnel, best wishes and let us know how you get on.

Best regards to all

Marine_50

I'm just approaching the start of my 5th year and am expected to release equity.
I have a pre protocol IVA so I am led to believe that the 85%LTV rule does not apply.
I have tried all ways to find out what rules are applied to pre protocol IVA's, all my IP will tell me is: if no equity available or I cannot raise a remortgage, he will request that the asset is removed from the arrangement.
Are the creditors obliged to agree to this??

Charco_2

Nope but why would they not?

You've served your time and paid your dues, if there is no value for your creditors in your home then what are they going to do? If you've no equity or cant release it then the worst case is likely to be that they'll extend your IVA by a year (disappointing i know but not the end of the world!) or they'll simply accept that theyve got their gettings and end the arrangement!

Try not to worry about it too much - just because your IVA might be pre-protocol doesn't mean that your creditors wont apply protocol standards when dealing with you.

pool-hustler

i have 11 months on my IVA.
I have a property with a bit of equity (not much).
The thing is, I don't think they know about this property... Will they find out?

debtinfo

probably yes, and they wont be happy that you have not told them, the best thing is to tell them now before they find out for themselves