finding the monthly payments crippling

[kathryn]

I have a mortgage of 35000 - a secured loan of 50000. I am in the second yar of my IVA paying 1200 a month from a salary of 2700net a month. My original unsecured debts were in the region of 98000. As my property is now worth 130000 and the amount owing on my total secured mortgage and loan is of course decreasing - will there be a point when I should remortgage to offer a settlement?

I am the family breadwinner and we are finding the monthly payments crippling - if at the end of 5 years I have done all this in order to remortgage and pay the amount in full - suerly I should have been advised to look at a debt management programme?

[MelanieGiles]

Hi kathryn

Why don't you look now at consolidating your mortgage and secured loan into one mortgage. Looking at the figures you have presented, this is definately possible, and the repayments on an interest only basis would be a lot lower than you are paying now. This would provide you with more disposable income, to assist you with those areas you are finding particularly tight.

You may also like to propose an early settlement to your Supervisor based upon an equity release now - as I assume you have to effect one at the end of the IVA. As you have only been in the IVA for over a year, however, I am not sure I would agree to this if I were your Supervisor, given that you could still afford to make fairly substantial repayments. What dividend is your IVA offering to creditors?

I do not think that you would have been at all wise to enter into a DMP, as the ongoing interest on debts of £130k would amount to over £15k per year - and you have saved all of that within the IVA. So your repayment period under a DMP would

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[MelanieGiles]

to finish that post.........!

Repayment period would have been greatly extended.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[kah]

What percentage of mortgage equity is normally due to creditors at the end of an IVA?

[MelanieGiles]

Hi kah

That is usually dependent upon the wording of your IVA proposal, or the modifications made to that by creditors at your meeting. If you are already in an IVA, do check those documents to see what yours specifically say.

It is usual to expect you to obtain two offers of remortgage, and accept the one which allows you to raise the most money. Generally, whilst you are subject to an IVA, you are only likely to be offered 85% of your property's value by way of a remortgage.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[neverending]

kathryn
It looks like you are returning 60p in the pound on your repayments plus a lump sum from your equity release and the way house prices are going you may well pay back the full amount [98k]
You could remortgage once you have sufficient equity to offer a full and final settlement figure but I think you would have to offer a fairly big chunk of your debt.Try to carry on for another year and I feel that you will be in a far better position,your house could be worth 140k+ giving you 55k equity[you could probably remortgage upto 90% of this giving you 40k to offer in a full and final settlement offer].You will have already paid 30 months[guessing] and that would be 36k less IP fees[6k?] so an offer of 70k on a debt of 98k would stand a good chance.
If you remortgage now to roll the Secured debt and mortgage into one then you would increase your disposible income.This is fine but do check with your IP that this increased "spare"money would not have to go into your IVA payments.

[kah]

Thanks for this. It does worry me that at the end of the day I'll end up with a mortgage for equity release - about to retire - so after all the struggling I might not keep the house anyway

[MelanieGiles]

Did you discuss these concerns with your IP at the creditors meeting at all? If so, I am keen to know what advice was given to you at the time.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[kah]

I only spoke on the phone to my IP. No - this was never discussed. I was told that I could not save any money during my IVA and indeed there is no contingency money at all in my arrangement (£15 for socialising and £15 for clothing)

[MelanieGiles]

I think that you need to phone the IP, or better stil go and see them personally, to discuss your concerns about ongoing affordability. You do not appear to have been left with sufficient money to live comfortably, so it is no wonder that you are finding things tight.

As Neverending has calculated, you have the ability to return a very good dividend to the creditors. I feel sure that you can work out a better deal for all concerned, but especially you who has to live through this purgatory.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk