IVA with Mortgage

[Billy12]

Hello- I am seriously considering an IVA but I am worried about the remortgaging part near the end- surely it wont be possible to remortgage after being on an IVA? Also if I have to try and remortgage with my own company surely that would go against me if they see I have been on an IVA? Or would they not be able to do anything if we have kept up with mortgage repayments? Also it is a joint mortgage and I have been told my partner will stay out of it and not be affected apart from his salary going towards outgoings?

Any advice/success stories would be very much appreciated. Thank you.

[MerlinL14]

Very unlikely you will be able to secure a remortgage during the IVA. New IVA protocols have a 12 month extension or a secured loan from a 3rd party of your IVA company to cover this shortfall in equity.

[Foggy]

Hello- I am seriously considering an IVA but I am worried about the remortgaging part near the end- surely it wont be possible to remortgage after being on an IVA? Also if I have to try and remortgage with my own company surely that would go against me if they see I have been on an IVA? Or would they not be able to do anything if we have kept up with mortgage repayments? Also it is a joint mortgage and I have been told my partner will stay out of it and not be affected apart from his salary going towards outgoings?

Any advice/success stories would be very much appreciated. Thank you.

5 years ago everyone got the 12 month extension as it was then impossible to remortgage. Now, a small percentage of lenders will remortgage in an IVA. Who can tell what the market will be like in another 5 years ? Added to this, some proposals these days have added the possibility of a secured loan, rather than a full remortgage, which makes more people, potentially, able to release equity. So it is an aspect that has to be thought through very carefully.

Your current lender will be aware of the IVA regardless of whether you approach them or not as a restriction will be placed on the title deeds.

Your partner will be unaffected by your IVA, except where joint property is involved (or joint loans). The equity to be released will be based on your share of equity, so his share will be protected, but he will have to agree to the further lending, if it comes to that, to release your equity. In the case of any joint loans they would become solely his responsibility.

Best scenario is that you a) choose a firm that does not require the secured loan facility and b) be unable to remortgage and therefore get an extra 12 months on the IVA term or c) have less than £5k equity, in which case the clause will not be triggered at all.

[abbiesmum2003]

Iva started 2013. Completed last year and equity released with a secured loan rather than remortgage (although it was available to us).
Lots can change in 5 years. We didnt think we woukd remortgage and expected the extra 12 payments at the end but this time last year we were given a different option to complete our iva.
Current mortgage has run fine alongside iva. No issues with it or the company. Our future looks so much brighter than it did 6 years ago.
Your mortgage payment will be included in your budget as an allowance and as long as you pay on time it shouldnt be affected. you wont be able to change your deal during your iva though.

[Billy12]

Thank you everyone for your responses.

I dont mean to be thick but what do you mean take out a secured loan? Isnt the purpose to be debt free and not get back in to debt?

Thanks again for your help

[Foggy]

Thank you everyone for your responses.

I dont mean to be thick but what do you mean take out a secured loan? Isnt the purpose to be debt free and not get back in to debt?

Thanks again for your help

The purpose is to pay back as much of your unsecured debts as possible within the agreed terms ... IF you take out a secured loan to release the equity, it will only be for what is deemed to be an affordable amount ( as opposed to the unaffordable debt you used to have. )

[abbiesmum2003]

We were given option of secured loan or remortgage....only had remortgage in our T&C’s so didnt actually have to do the loan.

For our own reasons we took that option. Its not much different to a remortgage (although in your terms it technically is so not obliged if terms only state remortgage!!!!)

The repayment is half what our iva was and its still a loan secured on property (like a remortgage would be) and it will be repaid with the sale of the house (like a remortgage would be) but it got us released from IVA for a very small cost.

I dont fee we have taken on more debt. We wrote off thousands, we have only added a small amount onto what effectively is a mortgage and we are no longer tied into our iva like we would be if made an extra year of payments. Its just what seemed right for us. What you do at the end for equity release will be your choice based on your situation, circumstances, figures and whats available at the time.

[Billy12]

Thank you- I hope I didn't cause offence I have just read a few horror stories where people have been forced to take out a secured loan for 15 years + to pay off the rest of their debt- this to me sounds awful and I suppose it depends on how much debt you are in in the 1st place if a secured loan feels like another debt?

Also does future interest stop on cards when you take out an IVA? So you have a set amount you know you are working to pay off with no interest added on monthly?

Thanks again for your help

[Billy12]

We were given option of secured loan or remortgage....only had remortgage in our T&C’s so didnt actually have to do the loan.

For our own reasons we took that option. Its not much different to a remortgage (although in your terms it technically is so not obliged if terms only state remortgage!!!!)

The repayment is half what our iva was and its still a loan secured on property (like a remortgage would be) and it will be repaid with the sale of the house (like a remortgage would be) but it got us released from IVA for a very small cost.

I dont fee we have taken on more debt. We wrote off thousands, we have only added a small amount onto what effectively is a mortgage and we are no longer tied into our iva like we would be if made an extra year of payments. Its just what seemed right for us. What you do at the end for equity release will be your choice based on your situation, circumstances, figures and whats available at the time.

My secured loan comment wasn't aimed at your post it was more me not understanding the post above yours about the secured loan. Nice to hear your debt journey has come to an end

[Foggy]

Thank you- I hope I didn't cause offence I have just read a few horror stories where people have been forced to take out a secured loan for 15 years + to pay off the rest of their debt- this to me sounds awful and I suppose it depends on how much debt you are in in the 1st place if a secured loan feels like another debt?

Also does future interest stop on cards when you take out an IVA? So you have a set amount you know you are working to pay off with no interest added on monthly?

Thanks again for your help

All contractual interest is frozen on the debts in the IVA. If you had a large windfall ( inheritance or lottery win, for instance) that was sufficient to pay all of the original debt and fees there could be statutory interest added ( currently 8% p.a simple interest) --- some proposals exclude statutory interest, however.
You don't have a set amount to work towards paying off ... you have an estimated amount --- this can be increased with overtime and bonuses, PPI and windfalls, if any of these come along. It can also be reduced (albeit only slightly) if circumstances take a down turn.

[abbiesmum2003]

Oh no offence taken at all x
The loan is over somwthing stupid to get the payment as low as possible but since secured on the house and HAS to be repaid on the sale of it and we i tend to move asap once credit score improved the duration of loan is irrelevant, and a remortgage would have also been over the same length as our current mortgage. This just got is a really low monthly repayment and no additional fees etc that a remortgage would have added (SL fees were added to the loan and refuced the amount creditors got back! haha!)
Focus on the now and what you need to regain control of finances. What happens at the end and inbetween is liable to change. Get your allowances and budget agreed so it is comfortable for your living now. We wefe lucky and had a realistic budget which made living comfortable and even allowed for the odd treat. I didnt want a Remortgage or SL (as like you say its more debt) when we first set out and thought noone would lend to us then things changed and we are free.

You always owe the full amount. Thats the ‘target’ not your iva payments. And even with the equity release at the end we have still had thousands wiped off and now have a clean slate.

[Lisa Thomas]

I haven't read all the replies so might be repeating something.

If your IP firm uses the standard Protocol terms then your IVA will likely last for 5 years with an extra year extension in lieu of the property equity.

R3 terms are however more flexible and would just need to compare to BKY.

It depends on your circumstances and how attractive your proposals are as to what you offer (and what creditors will accept).

[Azure]

Very unlikely you will be able to secure a remortgage during the IVA. New IVA protocols have a 12 month extension or a secured loan from a 3rd party of your IVA company to cover this shortfall in equity.

To be honest it's poor advice advising it's 'very unlikely' to secure a mortgage whilst in an IVA. It seems a lot of people who have entered an IVA on the back of advice like this have a shock when it comes to the time to release equity, as they find out it may be possible.

Lenders attitudes towards lending to people within an IVA has changed a lot over the last few years, whilst it may of previously seemed impossible; it's now very much an option for people in an IVA (provided they have the equity and it's affordable, but IVA rules follow this also) and there are lenders who will accommodate this.

The secured loan/second charge mortgage option is also available which increases the chances of being able to successfully release equity. Remember, a 12 month extension is normally only agreed on the basis that the debtor is not able to release any equity.

[MerlinL14]

Very unlikely you will be able to secure a remortgage during the IVA. New IVA protocols have a 12 month extension or a secured loan from a 3rd party of your IVA company to cover this shortfall in equity.

To be honest it's poor advice advising it's 'very unlikely' to secure a mortgage whilst in an IVA. It seems a lot of people who have entered an IVA on the back of advice like this have a shock when it comes to the time to release equity, as they find out it may be possible.

Lenders attitudes towards lending to people within an IVA has changed a lot over the last few years, whilst it may of previously seemed impossible; it's now very much an option for people in an IVA (provided they have the equity and it's affordable, but IVA rules follow this also) and there are lenders who will accommodate this.

The secured loan/second charge mortgage option is also available which increases the chances of being able to successfully release equity. Remember, a 12 month extension is normally only agreed on the basis that the debtor is not able to release any equity.

Mine is an opinion gauged from IVA experience, being on this forum for a good few years and reading stories of re-mortgage woes.
Can you cite how you came to believe my opinion is poor advice?

[Azure]

Very unlikely you will be able to secure a remortgage during the IVA. New IVA protocols have a 12 month extension or a secured loan from a 3rd party of your IVA company to cover this shortfall in equity.

To be honest it's poor advice advising it's 'very unlikely' to secure a mortgage whilst in an IVA. It seems a lot of people who have entered an IVA on the back of advice like this have a shock when it comes to the time to release equity, as they find out it may be possible.

Lenders attitudes towards lending to people within an IVA has changed a lot over the last few years, whilst it may of previously seemed impossible; it's now very much an option for people in an IVA (provided they have the equity and it's affordable, but IVA rules follow this also) and there are lenders who will accommodate this.

The secured loan/second charge mortgage option is also available which increases the chances of being able to successfully release equity. Remember, a 12 month extension is normally only agreed on the basis that the debtor is not able to release any equity.

Mine is an opinion gauged from IVA experience, being on this forum for a good few years and reading stories of re-mortgage woes.
Can you cite how you came to believe my opinion is poor advice?

I understand, as I said though attitude to lending to this type of customer has changed significantly recently, meaning the typical advice of 'you won't be able to remortgage anyway. don't worry', seems invalid. I work in the industry and regularly come across customers who have been told this at the start, when in fact a remortgage has been available and they have been told they need to go down this route by their IP.