My take on it is this:
Property value: £123,000
x0.85: £104,550
Mortgage: £80,500
Secured debt: £34,300
Total = £114,800
Equity = -£10,250
Based on the 85% LTV (£104,500) you have a total secured borrowing against the property of £114,800 (approx) so there is no equity in the property that would be required to be taken into the IVA in my view.
Make absolutely sure that they calculate any equity based on YOUR IVA protocol. As pointed out, some are now fudging the numbers - here's an example of the con:
Value: £123,000
Mortgage: £80,500
Sec. Loan: £34,300 (total £114,800)
Value minus borrowing: £8,200 (£123,000-£114,800)
£8,200 x 0.85: £6,970 equity
As you can see, in the above example they would 'show' you have nearly £7k in equity. This is an outright lie.
The reason the 85% figure is used is because this is what mortgage lenders would consider before allowing a remortgage - they would need to see at least 15% equity in the property based on its value which would be the first calculation I gave above.
It makes me very angry that some IPs are manipulating the 85% calculation in order to get more cash from people in an IVA. It's frankly dishonest if not outright fraud in my book.
I dread to think how many people have paid an extra year as a result of this calculation being abused. I can also see a lot more coming when people in 'new' 2014 IVAs find that they are forced by their IP to take secured lending in 2019/20 onward based on this calculation or risk the IP threatening to fail their IVA.
A ****-storm is coming over all this, mark my words!
Chingy: in my view you have no equity in your property to introduce to the IVA but check your paperwork to be sure.
