I have recently renewed my mortgage deal which is interest only on 2 year fixed (Halifax)(got 19 years to go), i have been in my IVA for 14 months and didn't expect to get a deal!
But they just transfered my mortgage to another 2 year deal and never asked or mentioned the IVA, all paperwork sent and they have confirmed my monthly payments, so far so good!!
Because im in the IVA and trying to get by for the next 4 years paying as little as possible, i don't have an endowment / payment vehicle to pay the mortgage off at the end of the term as i plan to go on a repayment mortgage after my IVA has finished and work on paying it off...
But..with my mortgage docs there is a statement saying that you must have some sort of repayment vehicle that will pay the mortgage off at the end of the term and, that periodically they will ask to see proof, if they are not satisfied then they can put you on a repayment only deal, now ive been on interest only for 2 years and have never been asked for proof, is this just something that the lender is bound by law to say and never asks you to prove it? has anyone had this?
Thanks
Ian
Last edited by icap9912 on Thu May 31, 2012 10:28 am, edited 1 time in total.
icap, If they've offered you a new deal it can only be because you're mortgage payment history to date must have been really good.If you'd just walked in off the street it would have been a different story. It is , however, a new product you've been offered with new T&C - hence the requirement re a repayment vehicle. Pre-credit crunch you would have got away with saying you intended selling before the end of the term. Now , however, the FSA has imposed much more stringent requirements on the banks and they do mean it when they say they will check. When you applied for the new deal you must have been asked for details of the repayment vehicle. What did you say ?
I think it may be something that they should check but hopefully won't. If you have to start a repayment vehicle it will impact on your disposable income and hence IVA payments.
I would just crack on and keep your fingers crossed
Andy is obviously right regarding the potential impact on your DI of putting a suitable repayment vehicle in place. They will check however and possibly before the new deal starts. They will also have asked for the information on the application. It may be that you are better off rejecting the offer with requirements and contine with your present interest only arrangement - albeit at the reversionary rate which I would assume is the Halifax SVR. It seems like either way you will have additional costs. Did your IP discuss this with you when took advice on an IVA ?
I agree with Tiger that Halifax may have changed the terms of the loan when they gave you a new one to comply with the FSA guidelines so as Andy says keep your head down.
If they do try and force you speak to your IP who may be able to help in any dealings or get creditors to agree to a reduction in payments. If you do go repayment there should be more equity available in year 5 so creditors may not lose out completely.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by TigerTiger
icap, If they've offered you a new deal it can only be because you're mortgage payment history to date must have been really good.If you'd just walked in off the street it would have been a different story. It is , however, a new product you've been offered with new T&C - hence the requirement re a repayment vehicle. Pre-credit crunch you would have got away with saying you intended selling before the end of the term. Now , however, the FSA has imposed much more stringent requirements on the banks and they do mean it when they say they will check. When you applied for the new deal you must have been asked for details of the repayment vehicle. What did you say ?
To be honest, i didn't think that they would offer me the deal and i said "yes" i did have a plan in place, if i went on the repayment SVR my mortgage would go from £700 to £1050 which would cripple me! ive already gone 2 years on an interest only with no repayment plan in place, so hopefully they wont ask!
I just need to have the Interest only deal until my IVA is finished then i will put the IVA payments into the mortgage.
I think i will just sit tight and see what happens..
Im not sure whether you can pay into an ISA / Endowment when in an IVA as this is classed as disposable income and must be paid into the IVA, (I think)
Last edited by icap9912 on Thu May 31, 2012 11:12 am, edited 1 time in total.
If you go for the new deal and they find out there's no repayment vehicle, the Halifax is very likely to cancel the deal and put the mortgage on a repayment basis at the SVR. If you reject the deal , you may well be entitled to continue with interest only albeit at the product's reversionary rate. Neither the FSA nor the Halifax are currently taking a relaxed view on newly constituted interest-only deals that do not have a repayment vehicle in place. Times have changed.
Do you have the option of rejecting the deal and staying on your existing interest only deal ? This may be a better route however I would think that they may want to see proof of repayment whichever route you take.
Were you asked about a suitable repayment vehicle when taking the deal ?
I have to say that I would say nothing until asked, the worse case scenario is that you have to go to a repayment mortgage and you can cross this bridge if and when you reach it
They cannot ask for a repayment vehicle retrospectively. It may well be that it was not required on the original deal or an intention to sell up before the end of the term was accepted. This is why so many people are now hostage to their interest-only deal. The requirements on new deals are much tougher.
well, I have been on an interest only deal since 2008 and changed the deal twice in that time, I have had these kind of statements too along with the documents but have never been 'forced' either to show proof or indeed go onto repayment, granted I appreciate recent changes and tightening up of mortgage lending means fewer interest only deals are now available however, it's not something I worry about, I can't imagine they would allow you to go onto another interest only deal if they were unhappy with you doing it, I wouldn't worry about it to be honest.
I am qualified in mortgage advice and know a lot of people in the industry. The climate is very different from what it was. Ian has already misled the halifax by telling them there's a repayment vehicle in place. Hopefully that was just to test the water and see what he might be offered - but I think all posters should think carefully before encouraging him any further down that road.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by TigerTiger
I am qualified in mortgage advice and know a lot of people in the industry. The climate is very different from what it was. Ian has already misled the halifax by telling them there's a repayment vehicle in place. Hopefully that was just to test the water and see what he might be offered - but I think all posters should think carefully before encouraging him any further down that road.
What if i said that the property will be sold at the end of the term to pay off the mortgage?
would that be classed as a repayment vehicle?
I have no intention of continuing with the interest only when the IVA is complete, i will be putting all of my IVA payments into a repayment mortgage.
Do you have a pension at all? when we took our mortgage out in 2008 long before our IVA, our broker was happy that our pensions could be counted as a repayment vehicle.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lem
Do you have a pension at all? when we took our mortgage out in 2008 long before our IVA, our broker was happy that our pensions could be counted as a repayment vehicle.
Not sure if this helps but we have just sorted out the interest-only element of our mortgage in this way;
Prior to submitting our proposals we had to get an assurance from our mortgage provider that we would not have to repay the int-only bit on the expiry of the term which was during our IVA.
We had no problem with this and our provider actually gave us in writing the option to extend the term of our mortgage up to our retirement ages withn the option to reduce the term again as and when required.
What this has enabled us to do is shift the int-only to repayment and reduce our overall martgage payment considerably.
We get to keep half of this reduction which is shown on our I&E as net surplus.
Obviously our return to creditors goes up but so does our overall allowance.
No exact figures were on our proposals so we remain in control.
When our IVA's are over we will reduce the terms back.
I don't recall seeing this option mentioned on here and it might not benefit anyone else but due to the number of posters who struggle it might be an option to explore for someone else.
Regards.
IVA completed with StepChange.
Last payment Sept 2016 CC Oct 2016
