Consolidation or Remortgage?

[mikebdomain]

Melanie, I totally agree and I wish everyone would continually remortgage. I would be a very rich man…

Charging orders for unsecured debt are generally granted where the debtor has; not made any effort to clear the debt or there is no alternative, but it is used as a LAST resort and is not an easy route for lenders to take. It’s about the same amount of work to repossess someone’s home. I have seen many lenders put borrowers into default and start repossession proceedings after only two repayments missed. Unfortunately, we deal with it every day.

I agree with and recommend remortgaging to clear an IVA, if you have sufficient equity in your property and future affordability is not an issue. However, I would not recommend some one turning unmanageable unsecured debt into secured debt as the first alternative prior to seeking alternatives, NOT borrowing more, but, perhaps an IVA or debt management.

Obviously horses for courses… Due to the individuality of each persons situation and their ability to repay debt and their attitude to risk I would ALWAYS recommend seeking the advice of professionals and weighing up all the odds and alternatives.

FREE ADVICE IS THE BEST ADVICE

Mortgage Broker
Specialising in adverse credit.

[Adam Davies]

Hi
Point taken,and I agree that it,s an easy cycle to get into of racking up unsecured debt,securing it by way of remortgage and then racking up unsecured debt again etc etc.
If you are a homowner and enter an IVA you are effectively turning a large chunk of your unsecured debt into secured debt because of the fourth year equity clause and will be paying for it for many years to come.
I guess he only solution is that once you secure unsecured debt by way of remortgage you are prohibited from taking out more unsecured debt as some people need protecting from themselves.
Mind you it will never happen.
Regards


Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Minnie]

It has been interesting to read the comments between the three of you, which started from my original query of - remortgage -v- consolidation loan and IVA.

In my circumstance the IVA will be in hubby's name only and as the property and mortgage is in my name there will be no fourth year equity clause.

Whilst I am consolidating my debt into one secured loan over a 10 year period (which is only way we can put together a reasonable IVA for hubby because of creditors taking into account my income and expenditure), I do feel the IVA for hubby is an interest free loan for 5 years (even allowing for IP fees) so surely would be madness to turn that into an interest paying loan over potentially 18+ years.

If we do find that he begins to struggle then I can look to remortgage in the future to offer a full and final settlement to his creditors. To remortgage now seems a very final solution and does not give us the chance to make the IVA work.

I am confident, as Melanie is aware, that hubby's IVA will work. I know that I would kick myself in 5 years time if I had a huge remortgage that we were relatively comfortably paying (and I know the monthly repayment would probably be lower than current mortgage + consolidation loan + IVA - but only just) and knowing that I still had 13+ years of this to go when if we had stuck to the IVA route hubby would be better off by £350 per month.

It is good to have the views of forum experts - especially sometimes when they don't necessarily agree! Thank you - keep up the good work. There are a lot of people, like me, that need your valuable advice.

[mikebdomain]

Minnie

I am glad you were able to come to an informed decision taking all the pitfalls and benefits into account.

Please do keep us informed on how it all progresses and good luck for the future.


FREE ADVICE IS THE BEST ADVICE

Mortgage Broker
Specialising in adverse credit.

[Minnie]

Thank you Mike - much appreciated.

[WhenInAHole]

Good luck Minnie...at least you got a better rate from the loan than I was offered!! Hope it works out for you.

Thank you Mike - much appreciated.