How to Avoid Equity Release in Month 54

UpToMyNeckInIt

There has been much discussion on the various IVA forums, with IVA customers understandably concerned about the ‘Equity Release’ clause in their contracts.

Fuel has been added to the fire with reports of some customers being compelled to take out a ‘secured loan’ when an attempt to ‘remortgage’ has failed. Needless to say, the interest rates and associated fees are extortionate.

This got me wondering if there was anything us homeowners in IVAs could do to make ourselves less likely to be accepted for such a rip-off product nearing Month 54. (Particularly if your equity is ’borderline’).

An obvious one is to make you place look as undesirable as possible to a potential buyer, adversely affecting any valuation. Its amazing how an untidy / overgrown garden and messy house can apparently affect a house price by £thousands.

Even removing kitchen cupboard doors/draw fronts) and hiding them in the loft for re-fitment later). Maybe deliberately re-hanging one or two, leaving them hanging unevenly off the hinges. All this will fool the average estate agent into thinking 'new kitchen required', and valuing (hopefully downwards) accordingly. Same applies for removing bath panels, and letting bathroom cleanliness deteriorate to 'student house' standards. (Not nice I know, but a means to an end).

Anyone with children and a screwdriver should have no difficulty in achieving the above combination!!! Just how disgusting you want the place to get is entirely up to what you can stomach.

All of the above measures are easily and cheaply put right after you are out of danger.

Also, if you have taken advantage of the £500 ‘additional credit’ clause in your IVA (not everyone has this, so be careful), you could then be 'accidentally on purpose' late paying back, racking up some more nice red recent ‘flags’ on your credit file.

Even sub-prime lenders have lending criteria, and many may consider you ineligible for their product if you have 'missed a loan/credit card payment is the previous 6 Months' (to quote one provider).

OK, so you rack up a few quid in penalty fees/interest, but still preferable to securing credit card interest rates, or a sub-prime mortgage against your property.

Then your IVA provider would have no option but to just extend the IVA for another Year instead (or conclude it at Year 5 if you've really trashed the place).

not wishing to make light of the subject, but just a thought or two.</SPAN>

cheesedoffwithdebt

hi- yes I can see where you are coming from, not sure how far away your house valuation is to be, mine is early 2015.

As I understand it, valuers look at not the price a house would go up for sale at, but a price below that to reflect a more realistic price anyway. However my understanding is (and I hope for my own sake I am right here) that prices have fallen over recent years because there just isn't enough movement in the market. Buyers need huge deposits, most people are staying where they are and improving rather than move.

There is longer term uncertainty over wage rises, and interest rates so Its certainly possible my valuation will be lower, whatever the state of the house.

Sorry but being female I couldn't stand the thought of living in a run down house so despite my frugal budget I have tried hard to maintain paintwork and the general look of my house because I want to feel good about it.

You could certainly try what you have suggested but to be honest I am not sure it will make £1000's of difference, sorry

UpToMyNeckInIt

...Fair comments: Well it was just a thought. Could tip the balance in marginal cases I suppose.

Granted, if you have a high percentage of equity, there is only so much you can do.

Your mention of house prices is interesting though. Certainly here in the South East, the market seems to be recovering - rapidly, and this seems to be a national trend as well (just shows how much the experts know: Just last Year many were predicting it would take 6-8 Years for prices to reach their pre-2008 peak.

This new Government 'help to buy' scheme may be partly responsible.

To quote a mortgage broker in the press recently: 'Just as the [housing] market starts cooking on gas again, along comes the Government with a gerry-can of petrol'

I am certain, that by 2016/2017, when I will have to get valuations, that I will exceed the 85% LTV trigger. (saying that, I will ensure that my accountant gets creative to ensure that, on paper, I cannot afford any sort of remortgage etc).

Another reported issue is some IVA customers struggling to get written valuations (especially where they have let-on that they only want it for the purposes of the IVA). In these cases Estate Agents/surveyors are charging for the valuation (understandably so).

This can be turned into an advantage: As you are paying for the valuation, you can dictate terms: Instruct the valuer to quote the lowest possible 'open market' value that they can sensibly get away with, (certainly not the bull**** sky-high valuation that a typical estate agent spouts, in the hope that you will market your property with them).

...Anything you can do to get the right side of the 85% trigger, or minimise what you might otherwise have to borrow has got to help.