How much is the trustee seeking for you to realise regarding the equity, lmcg37? From what you say, it sounds as though your trustee is expecting you to realise the 40% stake owned by the Housing Association. This surely isn't possible as it effectively doesn't belong to you!

In Homestake cases we would base equity calculations only on the % value of the property owned, ie in your case 60% of market value minus outstanding mortgage.

Hi Kevin, I'll need to find the original documentation and then query it with my trustee. I've got my latest summary report to creditors at Aug 2010 and the figures are:
Total realisations from contributions ?ú9000
Total realisations from assets ?ú27934
Cost of admin and outlays ?ú6125.78
Net realisations ?ú30808.22
Debt due to ordinary creditors ?ú53664.17
Dividend to ordinary creditors 57p in the ?ú

I know my flat was valued at ?ú106,000 when it was built and a year and a half later when I was purchasing it, the value had risen to approx ?ú120,000. However, the surveyor had to value it at ?ú106,000 for Homestake because that's the amount they had published in their brochure. The amount my trustee is wanting to realise is possibly the difference between the current market value and ?ú106,000 (and taking in to account my mortgage) but it still doesn't add up.

I'll make an appointment and speak to them about it to get clarification.

Thanks

Hi lmcg37.

It doesn't seem to add up. Even if the property were still valued at ?ú120000 your share of the equity would be only ?ú13000 once your current mortgage balance was cleared.

I wonder if someone at the trust deed company has made a mistake.

Hi All

the figures do look strange. If the IP has made an error, it needs to be corrected asap.

Mark

Hi, I contacted my IP and I received a schedule yesterday with the equity recalculated as ?ú4026, which I've to sign and return.

Do the creditors have to accept this since it's the IP's mistake, or can they take further action?

Thanks

Hi Imcg37

If it's the IP's mistake it's nothing for you to worry about, it's up to them to let the creditors know they made an error in the original paperwork.

Out of curiosity how did the Trustee calculate the revised figure? Did they get an up to date valuation and obtain a redemption figure?

Julie

Hi Julie,

I've got a feeling they've just estimated the figures, even though the schedule shows them as confirmed. No one has been in touch to ask me for any documentation, such as an up to date mortgage statement.

The figures they've provided are:

Current Market Value ?ú110,000
60% Ownership ?ú66,000
Outstanding Mortgage ?ú61,974
Equity ?ú4,026

They have put a note saying "Financed out at end of Trust Deed when equity may have to be recalculated".

That raises another question for me (sorry). What is the procedure for releasing the equity at the end of the 3 years, which should be April 2012?

I know you can't give me mortgage advice but my fixed rate came to an end and I'm currently on the variable rate. If I choose to sign up to another fixed rate, will this cause me problems at the end of my trust deed?

Thanks

Hello lmcg37.

That reads to me that the trust deed company have left the door open to revalue the property at the end of the trust deed, presumably in the hope that property prices will have been on the rise and because your repayment-type mortgage will have seen the mortgage balance reduce.

The issue with your mortgage is a little complex. On the one hand a fixed rate will likely be your preference so that you can budget effectively through the trust deed (and afterwards). On the other hand a fixed rate is likely to be accompanied by penalties if you had to remortgage during the fixed rate term.

However it's very hard to remortgage to a new lender while in a trust deed at the moment, and virtually unheard of to be able to release equity by increasing your borrowing. If the current mortgage lending conditions remain until the end of your trust deed, the issue of fixed rate exit penalties may therefore be utterly irrelevant anyway.

In practical terms most people will handle equity release through the assistance of a third party (often a relative), or through making additional monthly contributions (at the end of the usual term) in lieu of the equity.

Hi Imcg37

The Trust Deed firm would be able to obtain the mortgage redemption, they wouldn't need to get it from you.

Like TDA states it looks like they will recalculate the sum due at the end of the Trust Deed period. I don't suppose you have a friend or relative that would be able to pay your share of the equity now? If not the procedure for releasing the equity at the end of the period would be by either extending your Trust Deed to allow you to make additional contributions, a third party 'buying' out your share of the equity, which may well have increased by then, or you trying to remortgage.

I'm no mortgage expert, but I think TDA explains it well enough above!

Julie