Could someone please explain the 85% loan to value clause in the IVA proposal release of equity clause.
My proposal says :
The re-mortgage will be to a maximum of 85% loan to value.
The incremental cost of the re-mortgage will not exceed 50% of my monthly contribution.
also
If the increase of the mortgage means that the aggregate dividend to creditors falls below £50 per month after fees, monthly contributions will be stopped, and the IVA will be concluded.
At present my house is worth £100,000
Left on repayment mortgage £76,300, have only just been approved for IVA so have 5 years remaining.
Only half of the equity to be released as half is my husbands and he is not on an IVA.
It also says if the equity at month 54 is under £5,000 is is de minimis, and does not have to be released and there will be no adjustment to the IVA term.
Sorry if I sound thick but I just want some help to understand [:I]
Last edited by mumofthree on Mon Mar 01, 2010 4:19 pm, edited 1 time in total.
You don’t sound thick. Il explain below but if you’re still confused just post again with any questions you have and il be happy to answer them.
The re-mortgage will be to a maximum of 85% loan to value – As you say your house is worth £100,000 so you will only be asked to re-mortgage up to the value of £85,000.
The incremental cost of the re-mortgage will not exceed 50% of my monthly contribution – For example if your IVA payment was £400 per month the increase on your new mortgage payment must not exceed £200.
also
If the increase of the mortgage means that the aggregate dividend to creditors falls below £50 per month after fees, monthly contributions will be stopped, and the IVA will be concluded. – Once the remortgage is completed, if the monthly amount you then have available to pay is less than £50 then the IVA is finished.
It also says if the equity at month 54 is under £5,000 is is de minimis, and does not have to be released and there will be no adjustment to the IVA term. – If the remortgage quote shows that you could only re-mortgage for £4500 then you will not be expected to re-mortgage. You will just carry on paying your normal monthly amount over the agreed term.
Bridgewood specialise in helping people deal with their debts and make the most of their financial situation - providing free, no obligation debt advice.
We can also setup a complete range of solutions including debt management plans, IVA and bankruptcy support.
thank you very much Bridgewood, i do understand now. It was just the 85% bit, I didnt know what figures etc it was talking about.
Obviously I will have paid more off my mortgage in 5 years so will be more equity in it than now.
Thanks again
Last edited by mumofthree on Mon Mar 01, 2010 4:31 pm, edited 1 time in total.
Bridgewood specialise in helping people deal with their debts and make the most of their financial situation - providing free, no obligation debt advice.
We can also setup a complete range of solutions including debt management plans, IVA and bankruptcy support.
This sort of thing should always be carefully explained by an IP to their client prior to the proposals being finalised. Did you have a final clearance chat with your IP mumofthree before you signed your proposals?
Equity release is very important, and vital for IPs to make sure that their clients understand all of the provisions and implications attached to this requirement.
Mel... no it wasnt at all!
How do you think it will affect me? I have actually never spoken to my IP!
I wish I had discovered this site before I entered into the IVA process!
As previously posted we hope to do a F&F in year 3 (gift from parents)
Last edited by mumofthree on Mon Mar 01, 2010 6:53 pm, edited 1 time in total.
This is pretty shocking to read to be honest. IPs need to ensure that their clients fully understand the implications of all aspects of their IVA proposals before they sign then and issue them to creditors - especially when it involves the treatment of the family home.
Mel, can you explain briefly what the equity release clause will mean to me. I was just under the understanding that all they would want from me was the £9000 (150pcm for 5 years) and £4160 equity release, totalling the £13,160. We do intend proposing a f&f at year three. I dont think for one minute we would be able to re-mortgage as it would be just based on my husbands wage which is very low.
The only person I have spoke to is the person who put together my proposal.
I'm a tad worried now
I could - but without detailed knowledge of your IVA or any modifications put forward by creditors, my advice - which in any case would be general - could be completely inappropriate.
If you do not understand the provisions, and they have not properly been explained to you, get your IP to summarise this in writing on the basis that it has not been properly explained. Which firm are you with as a matter of interest?
Hi Mel, I will ring them up later today. Im with Harrison Brooks.
Just spoken to them, and everything is okay. I wont have to re-mortgage if I do a f&f in year 3.
And there is other restrictions if I re-mortgage in month 54. Got if explained in great detail. Feel better now [:)]
Last edited by mumofthree on Tue Mar 02, 2010 11:34 am, edited 1 time in total.
Well I am back haha and now in month 56. All has gone well and I have just sent my valuation and mortgage balance to my IVA company. Based on what I initially said over 4 years ago can anyone tell me what is likely to happen now?
Valuation of property is £85000 and mortgage remaining is £61,280
Last edited by mumofthree on Mon Nov 03, 2014 2:09 pm, edited 1 time in total.
Based on value of 85000, 85% value is £72250 with your mortgage of 61,280, you have jyst over 5000 equity each, which means you will have to try to realise this or pay up to 12 months extra. Is the 85k a valuation or a guess? You need a true valuation for a quick sale. Even a couple of thousand less would mean your iva concludes at year 5.
