equity release

[barbarella]

hi
my understanding is that most IVA's have an equity release for homeowners in the 4th year. a lot of IVA's which are concluding now and next year are unlikely to have any equity release due to house prices falling and the credit crunch and lenders not giving mortgages as freely.

my question is that an IVA on most peoples part (mine included) was to pay back what was affordable and then the rest written off. if a re-mortgage is not available (due to no fault on our part) why are creditors asking for an extra year of payments? i am at the end of year 3 and can nearly see the finish line; i will be sorely disappointed to have my IVA run an extra 12 months.

[Michael Peoples]

The extra year should only be if there is equity which cannot be raised. If there is no equity the IVA should finish as normal.

This actually works in your favour as twelve extra payments is better than be saddled with a higher mortgage at adverse rates for the remainder of the mortgage term.

[kallis3]

Hi,

As you would obviously be paying back a lot more if you remortgage then at least the creditors will be getting some more money back if you have an extra 12 months.

The idea of an IVA is to pay back as much as possible to your creditors, and if this means an extra 12 months in lieu of a remortgage, then so be it.

I imagine that if you can't remortgage, this is what will happen but you need to check with your IP company as to whether the creditors will want this.

[northumbrian69]

I start my 4th year in April 2010 and I continue to be confused by the equity release rules, I have a 4th year equity release clause so I don't know if the 'protocol' applies or not.
Can anyone answer this[?][?]
If my house were valued at £150,000 and there was £130,000 outstanding on my mortgage, no lender would give me a mortgage to release the £20,000 equity, 85% LTV is the maximum figure I have ever seen quoted on this forum, so in this case there is equity which is impossible to release unless the house were sold in which case a forced sale plus costs would make a massive hole in £20,000.
In this scenario does that mean because there is equity which can't be released because of lenders constraints I would automatically have 12 payments added on to the end of my IVA term.
I accept I am obliged to pay back as much as I can and I'm quite happy to do this, I do however think adding 12 extra payments on automatically is a bit naughty to say the least.
I signed up for 60 months and an equity release clause, if I can't release that equity through no fault of my own, why should I be penalised[?][?]

The extra year should only be if there is equity which cannot be raised. If there is no equity the IVA should finish as normal.

This actually works in your favour as twelve extra payments is better than be saddled with a higher mortgage at adverse rates for the remainder of the mortgage term.

[barbarella]

hi all

this was the point i was trying to express; you sign up to pay back at a fixed 60 months and then because of the credit crunch you are expected to pay another 12 months to make up a shortfall which is just circumstances and not of your making.

[soashamed70]

Personally I don't think you are being penalised - I would prefer to pay the extra 12 months given the choice (happy to remortgage as I'm happy to pay back as much as I can), like has already been said - it saves having a larger mortgage for a longer period of time

Each to their own, but I wouldn't call it being penalised - 12 months isn't really that long in the grand scheme of things.

I would take a different look at it - had you not entered into an IVA, what position would you be in now?

Its a tough one, and I get what you mean about seeing the light at the end of the tunnel, but if you can't release equity, you can't, so the 12 months extra is to give your creditors as much as you can.

Sorry if I'm babbling (not unusual!)

[Debt Monkey]

I am in a similar situation, wont have any equity and have made higher payments than I initially started (£540 first year £900 since first year review due to payrise/promotion). I hope that after five years it will be over or will I be expected to pay and additional 12 months?

At first I thought creditors were perhaps being greedy having speculated on the property market hoping to cash in on price rises but now that things have gone pear shaped they are demanding an extra 12 months of payments. I then quickly realised they are not greedy, it was I who was greedy getting into £100k of debt I could not afford to repay so perhaps I should pay the additional 12 months, hate to think of doing it though as thought I will be almost debt free in about 18 months!

[Shining]

I doubt I will have any equity in my property to enable me to remortgage so hopefully my IVA will conclude. If there is because house prices rise a lot then I will happily pay the extra 12 payments if I cannot remortgage if I need too. I understood this to be the case from the beginning, with the current market I think a lot of us will struggle to remortgage. I initially remortgaged to allow my disposable income to be enough for an IVA and I used Tony Parsons who posts on here as Welshboy and I can personally recommend his personal service a true gent and will definitely be trying him again when the time comes for me.

[MelanieGiles]

The IVA protocol was only introduced in February 2008, so anyone who has an IVA which started prior to this date can be assured it does not follow this procedure.

[newtoallthis]

So, in this case what would happen with an IVA that is already 6 years. If there was no equity would it be extended by the extra 12 months, therefore making the IVA 7 years in total??

[MelanieGiles]

This would entirely depend upon the terms of that particular proposal.

[kallis3]

They don't add it on automatically Northumbrian - as far as I am aware there has to be a creditors meeting first.

My own proposal states that if the equity is less than £5k the house is taken out of the equation and the IVA will finish after 60 months. However, there was more than £5k equity to start off with and I know that whilst the equity will have gone down, there will be more than enough to cover the sum we need to raise.

Due to our ages though, the chances of us being able to remortgage are extremely slim so the extra 12 months is pretty much on the cards.

[roz]

Beware!!! We currently have 2 months left to run and were supposed to remortage to 80% with no joy. We have tried all year and some of last year to get a mortgage even for 65%-70% with no joy. Every time we though we had one, another creditors meeting had to be called then the product got pulled from the market as it was another month down the line. We tried offering a variation for a one year extension which also was declined by one creditor who had a majority vote. We are getting no help from our IP and are currently in the process of trying to get a secured loan against the house to avoid bankruptcy. There is no clause in our iva to say that it would finish if we could not remortgage even though we have the equity. Several people on this forum have advised us and tried to help us, even to the extent of offering to speak to this one creditor, but our IP refused this. If any one can offer any advice it would be useful. Or are there any contact via this website for some legal advice as to where we stand.

[kallis3]

You need to speak to your IP about this as you are so close to the end of your IVA. They will be able to advise as to what is to happen, and you obviously need to get this sorted.

I am surprised that one of your creditors refused an extension when you obviously couldn't remortgage, presumably they were a major creditor.

[roz]

Our IP has said to us to find a 70% ltv mortgage or go bankrupt or come up with a solution ourselves. She is not offering any support. Yes it is First Direct who have a majority say in the iva