After completing our IVA we have been told that we have to take out a loan

[lem]

The issue I take with having to take a secured loan rather than a conventional remortgage is that in the past secured loans have sucked people in with fairly decent interest rates and then they have been hiked and hiked and hiked, this doesn't tend to happen with a conventional mortgage product, yes we all know the rates are variable but with a normal mortgage the rates go up and down, a secured loan seems to only go one way, up.

We have had 2 secured loans in the past and both were huge mistakes, they would increase the interest rates just on a whim, so it's all very well saying that it could only be 50% of your IVA payment, but that would just be the starting point, you could still soon find yourself in deep trouble again but with a much larger secured debt.

I wouldn't be happy to take out subprime lending again full stop, in my view, I don't see why I should be forced to take out a product to release equity that is going to cost me an absolute fortune if I'm not able to access normal rates, if normal routine banks and lenders consider me such a risk still, then fine, I will wait until I am no longer considered such a high risk.

[Goosed]

Skippy,
I have utmost respect for Michael and all posters on this forum, as I have since the day I arrived here in need of all your advice and help, and indeed as I still do.

Ethos is quite a relevant word I feel, by way of the ethos for all parties entering an IVA.


Let`s see how things pan out in the coming years, and let`s see what bearing any issues regarding after term loans have on the IVA providers industry if/when the media get a grip of it.

I see your arrangement is completed, congratulations and I wish you well.

[Broke of London]

Normally I love to wade into a debate with both feet! This time I am more hesitant. Home ownership is so emotive that I don't think this is something everyone will ever agree on! As a non-homeowner my feelings are mixed. On the one hand, credit allowed homeowners to buy their home so creditors are entitled to a share. On the other hand, should my iva be simpler because I pissed 30k up the wall and didn't buy a home with it? It is very rare I sit on the fence...but I truly don't k ow how I feel about this!! Thank you everyone who read the last sentence before jumping!!

[Muggins]

I just struggle with the fact that people are able to keep £100,000 in equity! We wouldn't be able to have £100,000 in a bank account nor keep any ppi or windfall as this is seen as an asset! I know that keeping your home is important but perhaps the banks now need to start lending at the normal rates as we are probably the least risky people out there! I know that I have never been as well off as I am now and am more educated in budget keeping than ever before!

[lem]

The thing for me Franky is equity rises and falls, I had £50k equity 4 years ago, now I have nothing as my house value has fallen that much, if I had ended an IVA 4 years ago and was forced to remortgage £30k of that equity I held at the time how would you expect me to feel now if I had an additional £30k in a high interest secured loan and would be in massive negative equity???

Equity isn't money in your pocket, we all have to have somewhere to live, at least if you rent and find yourself out of work you can claim housing benefit and council tax benefit, when you have a house, regardless of your equity position you can't claim anything, the mortgage still has to be paid out of nothing.

I completely agree that if you have a valuable asset that you hold it's understandable that creditors want paying back, but you shouldn't be forced to essentially go to loan sharks at extortionate rates to refinance to put yourself back into a lot more debt and in a potentially further risky situation when you took a solution to try to rebuild your life and get rid of debt once and for all.

My house is my home, I didn't want to keep it to be able to sit on a pile of cash, that money is tied up anyway and even if I had tons of equity I wouldn't be able to access it as I need to live in it, I bought it to have a home to live in that I wouldn't have to keep paying towards when I retire, not to be able to make money out of

[Muggins]

Hi lem! I agree with some of what you are saying but equally if you have debt and money to which you can access (difficult at times I know) then surely that is what you should do! The money may be tied up in bricks and mortar but like you have said it means that you don't have anything to pay once you retire! I had to suspend my pension and this I saw as a retirement asset also! If I had money in a bank account and said it was for my retirement the creditors would have told me where to get off!!

[Broke of London]

I think the important lesson here for anyone starting out on an iva to make sure their equity clause is explicit about "remortgage or 12 month extension" and be alert to any modifications the creditors may ask for. At least then people can decide whether an iva+releasing equity by any means will still represent a better solution than selling up.

[iamfubb2]

Maybe anyone thinking of undertaking an IVA (especially homeowners) should ask the company that they are dealing with if they are affilated to any "banks" or loan companies from the outset. If the answer they get is "YES" or, unclear i would run a mile

Sincerely iamfubb2 [;)]

[Broke of London]

The problem there is that affiliations change over time...and sometimes a brokerage can actually help find good rates. I think at the moment the options are restrictive rather than DFD deliberately finding poor rates. It would be interesting to hear Ryan's opinion on Annie's rate...but I wouldn't blame him for keeping a low profile!!!! [:D]

[iamfubb2]

There are more than enough independent financial institutions out there willing to give advice and find the best rates without insolvency firms or their IP's putting thmselves on the frontline. As i have mentioned before this surely could lead to a conflict of interests and therefore should in my opinion be made illegal.

Regards iamfubb2

[Pennyless]

If changes are made in regards to commiting IVA homeowners to large loans at over-inflated interest rates then I think IVA Companies in general will have to start weighing up the benefit between "commission" from their affiliated loan companies and the loss of "fees" that an obvious reduction in homeowners seeking IVA over BR will incur. Will it be worth it......only time will tell......but choosing a 3yr BR over Annies effective 20 year IVA doesn't take much working out.

[Goosed]

Personally as my IVA stands at the minute, and taking into consideration the value of my small, very humble abode,there wouldn`t be much difference in the amount achieved via equity release and a twelve month extension if the time for equity release activation was now as twelve IVA payments at my current rate virtually equals the very small amount of equity in my not very valuable house at the 85% LTV clause in my proposal.

I can`t see my house being worth much more, if any more, when I enter the final year of my IVA, and by then it will be in need of quite a few very costly repairs, roof, rewire, failing double glazing - (it already is, but they are not possible to carry out due to the IVA), so the house would probably be worth even less than it`s expected value to any prospective buyer or valuer due to it`s condition.

I suppose all I can do is see what transpires when the time arises.
All I know is that as I approach 24 months into my IVA, because an expected income reduction has not yet materialised, I have nearly paid as much into it as was expected in the full 5 year term before equity release, so (fingers crossed) all being well I will have been able to pay back much more than was expected to my creditors by the end of my IVA.

I entered my IVA because of the large, imminent pay cut I had been informed of by my employer. If I knew that two years later it still wouldn`t have yet materialised I would have probably chosen a DMP.

[Skippy]

This isn't going to be popular but I'm going to say it anyway! I don't agree with loan companies being linked to IVA companies but I do think that, if there is equity in a property, all efforts should be made to realise it whether that's by mortgage or loan. If it's not possible (and I know it won't be in many cases) then the extension should kick in.

I am not suggesting that existing IVAs should be amended in any way.

Regarding the BR comparison, don't forget that now the OR will hold onto the interest in the property for a minimum of 2 years and 3 months.

[Muggins]

It just doesn't sit right that if you have enough money in bricks and mortar to pay off debts then like skippy says why should you be allowed to keep it! Sorry but it's just my opinion! I think people should realise also that the official receiver may not agree to BR if you have enough to pay off your debts! I have a feeling and I may be wrong but BR is not an easy solution and can be refused! I really do think though that at the beginning of an iva equity release should be agreed in both the amount to be released and the means of doing so!

[Skippy]

The problem with agreeing the amount of equity to be released is that house prices may well change by the end of the IVA.

BR isn't the easy option and you're right, it can be refused although I don't know how often this would happen.