Iva - release equity

autumn2012_2 · 19 May 2019 at 9:26PM

Hi, Myself & Hubby are heading into an IVA. Paperwork has been sent off to creditors and awaiting response. The proposal is 32p/£ - Do you think this is reasonable? Payplan said they dont think its unacceptable as our I/E is already tight. Im worried incase it doesnt get accepted and then I dont have a clue what we will do :-(

Also in the last year we will have to release equity from our house. We will have equity in it - how does that process work? Will we just remortgage like normal or is it through a specialist lender?
Thanks

sourcrates · 19 May 2019 at 11:21PM

Chances are you won’t be able to remortgage, so an extra year of payments is usually the norm.

This should have been explained to you.

autumn2012_2 · 20 May 2019 at 9:12AM

So do we attempt to remortage? Do we get told how much to release?

sourcrates · 20 May 2019 at 11:38AM

I beleive the process involves you obtaining 3 seperate quotes from mortgage lenders, now, remember, you will have an insolvency on your credit file, most lenders decline applications for something as simple as a late payment, or possibly a default on your file, so with an insolvency sat there in all its glory, you are very unlikly to be able to remortgage, it may not be impossible, but very unlikley, but as you say, they may have a list of specialist lenders to use, you should ask your IP to be honest.

If you can`t obtain a remortgage deal, then a further 12 months of payments is what usually happens.

PrettyKittyKat · 20 May 2019 at 9:27PM

You really need to double check exactly what is written in your proposal regarding the equity release. It is likely it is as sourcrates has said above but you need to check NOW before the IVA is accepted and you are legally bound by it.

It is going to be 4 years until you will have to do the equity release so no one can predict what the mortgage companies lending decisions will be at that time. Currently IVA clients aren't able to remortgage so have to extend by 12 months payment.

Neutrinno · 7 June 2019 at 11:17AM

autumn2012 wrote: »

Also in the last year we will have to release equity from our house. We will have equity in it - how does that process work? Will we just remortgage like normal or is it through a specialist lender?
Thanks

You will have to attempt to release equity up to 85% of the value of your property provided you have at least £10,000 of equity available between you both. If a remortgage is available it would be with a specialist lender i.e. not a high street lender.

Depending on your agreement a second charge (or secured loan) option may or may not be part of your agreement.

PrettyKittyKat wrote: »

It is going to be 4 years until you will have to do the equity release so no one can predict what the mortgage companies lending decisions will be at that time. Currently IVA clients aren't able to remortgage so have to extend by 12 months payment.

I would be careful with this kind of advice as it is wrong. There are remortgage options available currently on both a first and second charge mortgage basis for people in an IVA who are at the equity release stage.

IVA firms now regularly refer customers to specialist mortgage brokers who deal in helping customers in an IVA remortgage when at the equity release stage, instead of just asking debtors to get a couple of mortgage rejections from the high street. So it can be bad advice from third parties to advise it's impossible to remortgage and the standard 12 month extension rule will kick in. Just something for debtors to keep in mind if the equity release stage in a concern.

foxy-stoat · 7 June 2019 at 11:46AM

How much equity do you have in your property and how much to you owe?

Autumn2012 · 15 June 2019 at 9:36PM

Ok so I called payplan to ask about it. My case officer said all it involves is approaching 2 high street lenders who will probably reject us outright and then maybe an extra 12 months of payments.

Is this right?

Autumn2012 · 16 June 2019 at 9:51AM

We owe between us 45k and we have around 45k in equity currently. Im a little bit concerned as my case officer has never mentioned secured borrowing instead of remortgaging however my paper work states "3rd party borrowing". It isnt very clear and transparency should be key.

Neutrinno · 17 June 2019 at 12:40PM

Autumn2012 wrote: »

Ok so I called payplan to ask about it. My case officer said all it involves is approaching 2 high street lenders who will probably reject us outright and then maybe an extra 12 months of payments.

Is this right?

If that's what you have been told then yes. Some IVA firms will be happy with you just approaching two high street lenders who will obviously decline you, and some IVA firms use their own brokers who may have options available.

Autumn2012 wrote: »

We owe between us 45k and we have around 45k in equity currently. Im a little bit concerned as my case officer has never mentioned secured borrowing instead of remortgaging however my paper work states "3rd party borrowing". It isnt very clear and transparency should be key.

You need to discuss this with your IP if it isn't very clear. Make sure you have a good understanding of the clause and what they expect at the equity release stage.

DorisTrousers · 19 June 2019 at 1:56PM

In the unlikely event, and it is unlikely, that you are in a position to obtain some secured product or other, then there are additional safeguards built in for you as well.

These are that any new product cannot extend beyond the remaining term of your existing mortgage. It cannot take you past state retirement age, and you cannot be expected to pay any new product more than 50% of the IVA payment that exists at that time. If still feasible, the remaining IVA payment will be reduced by the equivalent amount and the IVA will conclude at 5 years instead of 6. In all likelihood, and given how the above safeguards will like as not shrink available products still further, it is very likely to be 6 years rather than 5.

Iva - release equity

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