mortgage and equity release

[ashingtoon]

We entered into an IVA. The IVA is over 6 years and we then have to remortgage to pay the remaining funds which will pay the almost the full amount owed. We are concerned as we fear we may not be able to do this as we need to set up an ISA to cover the current mortgage as it is interest only or arrange a repayment mortgage. When we have looked online at current rates to pay a repayment mortgage for what is owed currently or to set up a covering ISA at the end of the IVA it totals to £100 less than what we are paying now. How will be able to afford any equity release? At the end of the IVA we only have 15 years work life left. What should we do?

[Adam Davies]

Hi
As you are already in your IVA I presume that you will not have an allowance to pay for a repayment vehicle for your mortgage.
To be honest I would leave your mortgage on an interest only,otherwise you will be reducing the amount owed and increasing your equity,this will increase the amount to be paid in year six.
After your IVA is concluded you could use the money that you were paying into the IVA to overpay your mortgage each month and should be able to repay this in full before the 15 years are up
Regards

[ashingtoon]

Thank you. I thought this would be okay but I am worrying because at the end of the IVA using the money we paid to the IVA and our current mortgage payment will mean we will only be £100 better off and with the cost of living dont think this will account for much in 6 years time. This will mean we wont be able to borrow, looking at current rates, any additional funds to pay a lump sum off the final debt as part of the arrangement. What will happen here? I was planning to write to my IP about this so they are aware of this. Is that the right thing to do?

[ashingtoon]

PS: they were informed of interest only mortgage and no ISA before the agreement took place.

[Adam Davies]

Hi
You will only be able to remortgage upto your affordability level.Mortgage companies will lend a max of 85% of your house value,but this will depend on affordability on your part.I can't see any mortgage company leaving you with only £100 disposible income.New protocol allows for a maximum of 50% of disposible income going towards the new mortgage.
In reality you will only release an affordable amount and it will probably be less than 85% ltv,however you have still complied with the terms and conditions of your IVA
Once you have done this your IVA will be
finished
Regards

[cfnc]

Think you need an expert for this, I am concerned that you pay into an isa by using your living money and will effectively be paying twice.

Kirsty

[MelanieGiles]

There are going to be a lot of people in this boat when it comes to re-mortgaging, and at the end of the day no-ones IVA is going to fail if they cannot raise any extra finance. If the worst comes to the worst your IP can call a meeting of creditors to ascertain their views, and affordability into the future for your both will be a key deciding factor.