I thought that the timeline criteria to be applied for further borrowing to meet the equity release clause was 'not past term of mortgage or state retirement age, whichever is later'.
Thank you for your information Shaun.
Even at 13.9% APR 20k over 25 years still means paying £58,000 in interest at a repayment of just under £240 per month.
Shaun, when you say people who have had iva's get the same interest rates as standard applicants, do you mean people currently in iva's trying to release equity or people with completed Iva's trying to obtain a loan?
Last edited by Goosed on Mon Feb 10, 2014 7:36 pm, edited 1 time in total.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
What I was trying to point too was that the longer you have left on your mortgage the longer the loan can go on which in turn would lead to lower payments so there would be more chance of it falling below the 50% IVA threshold.
Devils advocate time but historically people in ivas took out a sub prime remortgage to release equity. This changes nothing but people have gotten used to paying an extra 12 months in lieu of equity and maybe those who have been through an iva without having to free up equity have got off lightly by being allowed debt write offs while sitting on a significant sum of equity.
the iva industry is simply adapting to the market to ensure the best return for creditors(and more importantly a greater profit for them).
Paul
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
Since I started doing IVAs in the 1990's, there has always been much to talk about with regard to raising equity at the end of the IVA. In reality, it rarely happens as we don't very often see people in IVAs with more than 85% loan to value. Yes - it can happen, but I don't predict major growth in house prices over the next 5 years at least.
I guess you are right Melanie, in that debtors have often already looked at utilising equity to pay of debts before they have commenced an IVA.
However, it is rare that house prices are static for so long, when the market moves and some are predicting this soon, even a modest annual house price increase can have a dramatic effect with compound interest. For example a £150k house with a 4% annual rise could mean a value of £182k at the end of 5 years, and hence a possible large secured loan at the end of the IVA that was not possible anticipated at the start of the agreement.
BTW, when does this come in affect, I have not seen any IP website updating the details to explain or highlight these new obligations.
In addition to mole`s query of when this new clause comes into effect,
Is it applicable to IVA`s to be drafted and approved as from that date or is it to be applied to all current ongoing IVA`s, therefore rendering all proposals and their advised, drafted and agreed equity release conditions and the terms that the debtor agreed and signed up to in a legally binding arrangement completely worthless???
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
Currently agreed and active IVA's will not be affected as they are subject to whatever terms they were drafted under and cannot be changed without all parties agreement, unless such change is already provided for within the arrangement already.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
