Iva equity release

parker18

Hi I am now at that stage where I have to release equity. But could anyone tell me if releasing equity is voluntary. I do have equity but in these unprecedented times nobody knows what the future holds

sourcrates

Usually you have to obtain 2/3 quotes i think, if its not possible, a further year of payments is the norm.

Most high street lenders won`t touch you, if you know what i mean..........

parker18

Aperture use select partnership to sort this out if I'm not happy with what they come back with can I say no and do another 12 months because the government say it's voluntary 

normanna

Equity release is not voluntary.  You will have agreed to release equity when you signed up most likely.  I don't believe you can reject a proposal from Select if it meets certain criteria but others with more knowledge may be able to advise further.

parker18

The government website suggests it's voluntary I could of got it wrong 

reliquit

My IVA was with Aperture. It says on the original documentation that I would be required to pay for 7 years as I would be unlikely to be able to get an Equity Release mortgage due to age and other factors. However, when the time came, house prices in this part of the country had risen dramatically and I suddenly found that I had about £200k equity in the property. Despite my protests, Aperture insisted that I speak to Select Partnership about Equity Release. I was not happy with the situation, until I read the small print in Select Partnership's leaflet which stated that the monthly payment of the ER mortgage would not exceed 50% of the final monthly payment of the IVA, and the period would not exceed 10 years.

My final IVA payments were £314 per month, so my ER mortgage payments are £157 per month for 10 years.

£314 x 12 = £3768

£157 x 12 x 10 = £18,840

However, the amount raised by the mortgage and paid into my IVA (£10000) was low enough to leave me still with £140k equity. That £10000, plus the payments I had already made, meant that I  paid off slightly more than 75% of the total debt I had when I entered the IVA. Additionally, about 12 months after completion of the IVA, Select Partnership will find me a better rate for my existing £44k mortgage than the SILLY% I am currently paying.

So to sum up, initially I was vehemently opposed to the idea of Equity Release, but in practice it was nowhere near as bad as I thought it might be - and I have the satisfaction of knowing that I paid a lot more of my debts than I expected to be able to.

parker18

Thanks for your reply. But my question is do I have to take out equity when the government are saying it's voluntary only if the debtor wants it

RauHughes

parker18 said:

Thanks for your reply. But my question is do I have to take out equity when the government are saying it's voluntary only if the debtor wants it

The government has nothing to do with your IVA. Your IVA is governed by the proposal your signed. The only 'Government' involvement in your IVA is the rules set out in the Insolvency Act.

If your proposal states you would attempt to release equity in month 54 of the arrangement ( and even if it didn't most creditors would put forward a modification to include this clause) then you must attempt to do so. If you are able and refuse, it will be a breach of your proposal and your IVA will fill and the last 4 and a half years will be for nowt. 

Why would creditors agree to take 12 additional contributions which are likely significantly less than the equity you could release simply because you don't want to release equity?

parker18

If you look on the government website it specifically says there should be no realise of equity only if the debtor wants it

RauHughes

parker18 said:

If you look on the government website it specifically says there should be no realise of equity only if the debtor wants it

Yes, and what the 'debtor wants' is specifically stated in their proposal. 

What the website is referring to is in the Insolvency Act there is no set specific way property or equity should be dealt with in an IVA. This is different to say bankruptcy, where there is set-in-stone regulations about how the debtors home and assets will be dealt with.

Even though there is no set way property must be dealt with in an IVA, creditors normally expect a proposal to contain what the contain a standard equity clause - i.e. you try to release equity in month 54, if this fails you pay 12 additional contributions. If your proposal contained this clause, or creditors modified it in and you accepted these mods this is now part of your arrangement and you cannot refuse to comply to this clause without being in breach of the Arrangement.

The only possibility is to propose a variation to remove this clause, but you would need a much more significant reason than 'economic uncertainty' or 'I don't want to' for creditors to agree to this, and your IP knows this so will likely refuse to put forward a variation at all on these grounds.