Equity release question please.
Could you please help me to understand the equity release clause in our joint IVA. The clause states:
. The amount of the equity to be released will be based upon affordability from income and will leave the debtor with at least 15% of their equity in the property. Where it is appropriate to re-mortgage the property through a repayment mortgage (as opposed to interest only), the specific limits will be:
• Re-mortgages would be to a maximum of 85% LTV.
. If the amount of equity available in the home at month 54 is under £5k, it is de minimis, and does not have to be released, and there would be no adjustment to the IVA term.
I asked our IVA supervisor to explain this and gave a hypothetical example of the house value being £100k and the outstanding mortgate being £90K. I was advised that we would need to remortgage to release £5k each.
I think that I have totally mis-understood as I thought that my example would give a LTV of 90% and the clause states that the maximum LTV is 85%. I expected that this would mean the equity release clause would not apply.
Hmmm, I understand it in a simialr way to you. Say, as above, the value was £100k, then 85% LTV would be £85k. With an outstanding mortgage of £90k, you'd be in negative equity, therefore no extension would apply.
Are we both missing something ??
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
The advice you have been given is incorrect. Using the figures you have quoted there would be no equity to release as your lending would be at 90% loan to value and therefore in excess of the 85% limit.
ive just made a f&f offer, and have also been told by the person i spoke with on the phone that my offer would not be enough based on provisional figures and equity release.
even though i have about £10,0000 equity my LTV works out at about 90%, so i also thought there would be no equity to be released.
i am confused, think i will wait for official mortgage redemption and house valuation, as the figures used at the moment are about 10 m0nths old. then maybe i will contact melanie direct.
unless of course its different because its an f&f
kat
IVA accepted 6th May 2011, Full and Final accepted 17th April 2012.
