What is a Equity Release?
If you own a property with a mortgage, depending upon the value of the house and the outstanding balance owed to the mortgage provider, you may be asked, or feel that it is the best option, to release value within your home in the form of a re-mortgage.
Through a re-mortgage, you can use the capital within your property to clear part or all of your unsecured debts. This can be done independently through your own means, or as a compulsory part of an IVA, forming part of the final contribution.
For example, if the total amount payable in an IVA was £18,000, and the client was contributing £220 per month towards the IVA (over a 60 month term), £13,200 in total. As the monthly contribution is based on what the client can afford, the IVA would only be viable if the client releases £4,800 in equity from his property through a re-mortgage.
This usually happens in the final year of the IVA, and is clearly stated at the start of the arrangement, before the client signs the IVA contract with the insolvency practitioner and his creditors.