Query

[sosilly]

Hi

Does anyone know what "estimated cost of realisation" means? If our house is valued at £156,200 and we currently owe £132,900, that leaves £23,300 equity. It then says on the paperwork minus estimated cost of realisation £4,556 which takes it to £18,744 minus 50% to my husband leaves £9,372 equity. Is That based on a 100% LTV? What would be the 85% LTV on those figures so what would be the equity on those figures 85% LTV. Sorry I am no good with calcultions. Many thanks[:I]

[Michael Peoples]

Costs of realisation means estate agents, solicitors etc and is applicable in bankruptcy when calculating the real amount of equity in a property. When calculating a remortgage these costs do not apply so I hope this makes sense.

[sosilly]

Thanks again for your clarification Michael, that makes sense. Going back to what the property is valued at £156,200 minus £132,900 = £23,300 equity is this based on 100% loan to value. It states in the proposal

"Six months prior to the expiry of the IVA there should be an attempt to release home equity (this would normally be after month 54, unless the IVA has been extended for any reason). However, where I am unable to obtain a re-mortgage, the IVA should instead be extended by up to 12 months. The amount of equity to be released will be based upon affordability from income and will leave me with at least 15% of the equity in the property"

Therefore the remortgage would be calculated on 85% LTV is that correct so based on the figures above would the 85% LTV at the moment be £132,770 minus what is currently owed £132,900 which would leave £130 equity is that correct so there would be no remortgage required if the equity was below £5K and the IVA would not be extended. Thanks

[esgt1967]

Hi, if your IVA says a 85% valuation (ours do) then 85% of £156,200 = £132,770 and as your secured borrowings are £132,900 there is no equity (minus £130) so there should be no extension.

[Michael Peoples]

There would be no extension at these levels bt if property prices go up and the mortgage balance reduces this would change.

[sosilly]

Thanks Michael. I understand that.