Hi leeper1974

I wouldn't have thought so. Only person who could confirm the position would be the trustee. Although do you want him to be alerted to the change?

Mark

quote:

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Originally posted by Mark McFadyen

Hi leeper1974

I wouldn't have thought so. Only person who could confirm the position would be the trustee. Although do you want him to be alerted to the change?

Mark

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True, but then where do I stand at the end of the TD with the amount I need to release? The amount that I signed on or the letters that come randomly with the reduced amount on them?

Hi

I wouldn't have thought your bonus and PPI would make any differnce to your equity. It may just be that the Trustee is being realistic, and taking into account any costs that would be incurred if the property was sold. Many Trustees do disregard some of the equity for this reason. As Mark says, the only way you will know is if you ask your Trustee.

Hi leeper1974

My advice would be to contact your trustee advising that you are looking to plan ahead to deal with the equity and ask if they would agree to an extension and request exactly how much is required to be paid to allow you to plan.

Mark

Thanks, Ill get in touch, I'm not needing an extension I hope but I need to know what they'll be after as I'm hoping to get it from a 3rd party

Mark(or one of the others in the know),if at the end of a TD a client suggests their equity is much lower than was agreed at the start is it reviewed or or they stuck with the initial valuation. I understand its a little bit of having ones cake and eating it.

Paul

Hi plasticdaft.

It really comes down to the exact nature of the trust deed you signed.

Commonly now equity is "fixed" at the start so any change in the value of the property isn't necessarily relevant (whether it goes up or down). That hasn't always been the case at all firms though.

Sorting out the equity at the start makes sense to me which is why we suggest frequently here that people get certainty and written confirmation on this before signing a trust deed. Knowing where you stand means you can plan.

but how can you release a fixed amount that was stated at the start if the value of your house has fallen at the end of the td my equity was 25,000 at the start but now it may be as low as 14,000

You would struggle to remortgage to release equity nowadays anyway Sallymilne but traditionally thats what you had to do.

Now its more common to have a 3rd party introduce funds or for the trust deed to run on after the 36 months to allow you to pay the equity figure(so the lower the better)

Paul

Hi sallymilne.

Plasticdaft is correct.

"Releasing the equity" isn't the best term to use any longer. There used to be two ways to release the equity which actually exists in your home:

1 - Get a new higher mortgage secured on the home.

2 - Sell the home.

The first of those options has pretty much gone as mortgage lenders have tightened their lending criteria so much. The only way, for almost everyone, to "release" the actual equity in their home would be to sell it.

Perhaps a better way to look at this nowadays is that you'll need to find a way to "raise a sum equivalent to the value of the equity in your home" or be prepared to sell it. Ways to raise a sum equivalent to the value of the equity in your home include:

1 - Making extra contributions at the end of the trust deed term, provided that you can repay the amount due within a reasonable timescale.

2 - Being able to rely on a third party being able to help you.

3 - A combination of both.

If you agreed to pay a fixed amount of equity at the start of a trust deed then the options above are unaffected by the decrease in the equity in your home.
An alternative would be to sell the home. Even if the equity produced were less than the full amount due "for equity" this should bring the trust deed to an end.
Because this alternative exists, it may create some scope for negotiation with a Trustee. For example, if the actual sale of your home would only produce £14000 for your trust deed (and end it) would you be able to get an agreement to raise £15000 (rather than £25000) somehow in lieu of the equity? If so, there would be no point in a Trustee forcing the sale of a home?

I wonder if this lack of mortgage availability is affecting those starting out on trust deeds.

Knowing that a remortgage is almost impossible with a trust deed on file are trustee's accepting less than true valuations of equity to make trust deeds still a viable option.

Paul

Hi

Yes, Trustees are accepting 'reasonable' offers. Trustees don't want to sell someoone's home if there is an other alternative. There is always room for negotiation, bearing in mind that a Trustee cannot force the sale of someone's home under a Trust Deed. If the Trustee wants to force a sale against the person's wishes, the Trustee would have to apply for the debtor's sequestration (bankruptcy), which then gives the Trustee the power to force a sale. All of this costs money, so it is better for creditors if you can come to a reasonable agreement with your creditors.
Some Trustees disregard some of the equity, because if a house was sold there would be extra costs involved in that. I imagine that is what has happened to leeper1974.