Yes thanks wiggle 1 ..lots of lessons learnt now . My hubby and I now communicate about money in a much better way than before the IVA and we have learnt to do without when we cant afford it .
Don't forget regarding the APR there are 2 important messages. Firstly we treat this loan as a stepping stone. It's a means to an end to satisfy the IVA but as soon as there's an opportunity to consider a re-mortgage onto competitive rates (normally around 12 months)we'll let you know. There are no Early Repayment Charges on the loan. Secondly, because we can rely on a clause in the IVA limiting repayments on the loan to 50% of the IVA contribution it can be argued that the fees are actually being paid by the creditors; if they didn't exist then the total loan would be the same but more would be paid to creditors but the APR would be lower. It's a unique situation and as I often repeat on the forum there's always a bigger picture.
Specialist Mortgage Advisers. Highly Commended at the British Mortgage Awards.
In this instance the OP is happy with a secured loan and what it achieves for their individual circumstances.
As the poster has very kindly shared their APR for the loan, others can now see what types of interest rates they will be looking at should they wish, or have to take the same route.
I imagine any secured loan arranged for a debtor is on a variable rate so would increase further as interest rates rise.
There is no guarantee whatsoever that any borrower would qualify for a more competitive rate as their credit rating slowly improves post IVA and the six year CRA default recording period, to suggest that a borrower could refinance onto a competitive rate after only twelve months of taking out the original loan is not a given.
The interest and charges for any loan are only paid by the borrower, simple as that, nothing to argue.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
Fixed rates are generally available for those who prefer and generally the rates available to debtors are commensurate with rates offered to non IVA customers. Of course there are no guarantees that people will be able to re-finance after 12 months but it's a well trodden path and the majority of people do qualify. Regarding the fees I'm afraid I don't agree for the reason I've explained but in any event we also have to bear in mind that a re-mortgage is likely to incur more significant fees.
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Congratulations Seagulls on getting you F&F accepted although i feel that it is a shame you had to take out a secured loan. I strongly believe that almost every IVA company gives mis-guided information to anyone looking for an IVA. Every IVA company website that i look at states clearly "be debt free in xx years (usually 5)"but actually this is totally untrue - it should state be debt free in around 5 years if you don't own a house otherwise be debt free in around 15 years. That is essentially what it comes down to whether you take a remortgage or a secured loan, you finish your 5 years in an IVA but you finish with an additional debt that you have to continue paying albeit a manageable debt but it is still an additional debt. I think all IVA companies should remove completely from their "advantages of an IVA" that they will be debt free in around 5 years - for many people this is simply not true and misleading.
IVA started Jan 2012
Last payment made June 2014 @100p
Completion certificate received Sept 2014
There is obviously a place for these sub prime APR secured loans and they suit some situations as the OP indicates.
Which ever way anybody tries to quantify or qualify the applicable/ available interest rates they are what they are for those of us in our less than creditworthy position, apparently upwards of 15.4%.
I look forward to seeing the first post on the forum from someone who has taken out such a loan and refinanced to a competitive rate twelve months later.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
It's perhaps because most of these people feel that they have moved on that they don't come back to the forum and of course confidentiality prevents me from identifying individuals. As I say it is an extremely well trodden path but I'll have to ask you to take my word for it!
Specialist Mortgage Advisers. Highly Commended at the British Mortgage Awards.
You have obviously helped many people achieve what they wanted to in their relative circumstances, not to mention the advice you have given - and continue to give many people via the forum.
I was just posting a genuine thought, nothing more.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
The thing that seems to be ignored here is that most people who enter IVAs and have equity in their property have attempted to remortgage beforehand. This would have entailed repaying all their debts in full and possibly extending the term but they did not qualify for that.
The IVA is an opportunity to then get protection from creditors and retain their home but with the proviso that they must at least try and release equity at a later stage. This equity release rarely repays creditors in full but is done at a level of affordability that would exceed the current Bank of England guidelines for a mortgage!
Every client I speak with who has equity is advised to investigate the remortgage option as it avoids credit agency problems and also repays creditors what they are owed. I have also advised people to sell and repay their debts where they have a monthly mortgage commitment that is clearly causing the problem.
An IVA is not a means of avoiding repaying creditors and holding on to whatever equity you have in your home. It has to be fair.
It is an interesting debate and Michael is completely correct in terms of the requirements and objectives of an IVA.
However, whether it is because of a lack of understanding of the debtor in terms of their obligations or whether this was not made very clear by the IP at the outset. There are a number of people who feel this is an additional burden being pushed on them after the initial agreement, and I think that is where the resentment and push back comes in.
There must be at least a thread a day on here with people asking about equity release, some with no knowledge at all others with a very vague understanding. This is far too many people for it to be isolated incidents and does suggests not enough emphasis is made on this most important of clauses at the outset.
I understand in the 2008 protocol, IPs should demonstrate to creditors likely equity returns based on 4% per annum house price increases? I think debtors now also need to be provided with a forecast illustration of likely secured lending costs relating to the equity release clause at the start of the agreement.
I think this is the only way for a debtor to fully understand what they are entering into and to prevent this resentment at a point later in time when they are obliged to seek equity release.
As in instances when it`s possible to utilise them to make a F&F and the debtor is able to pay off the loan over a short term, or at equity release time where a debtor chooses to take one if it proves to be a cheaper option than the remortgage offered in their case.
Last edited by Goosed on Tue Jul 08, 2014 12:11 pm, edited 1 time in total.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
