Mortgage Rate Rises

[olympic_torch]

In common with many other posters on here who are starting out on the
IVA journey, since preparing our original income and expenditure details on which the IVA was based, we have had 2 increases in the mortgage rate, with another rise to come before christmas if rumours are correct.
Assuming a figure of £50 a month, these 2 rises have already wiped out any 'contingency' built into our figures by our IP.
Sometime very soon this is really going to start hurting us.As with everyone else in IVA there is no margin for error in our figures.I already have 2 jobs whilst Mrs T relies on disability benefits.
Also, we are not allowed yo ask for variations to our IVA within the first 24 months.
What is the opinion of our venerable team of experts as to how this will impact on a first year review, ie, can monthly payments go down as well as up?, or does cardboard city beckon for me and Mrs Torch?.

Aucto Splendore Resurgo.
(3 down, 57 to go)

[MelanieGiles]

Hi again

If you genuinely cannot afford the IVA payments as a result of mortgage interest rises, a quick variation ought to do the trick. Personally I can't wait to put the validiy of this no variations clause in first 24 months to the test, but I only have this modification in an handful of cases. Everyone knows that mortgage rates are rising, so you would be well to get your IP to build in a further contingency factor into your varied arrangement. I am personally building this into my own IVA proposals at the moment.

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

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

[olympic_torch]

Thanks Melanie.
We will try to soldier on for now.
Its a bit early to tell yet, we can adjust other spending for now i guess.
If things get tough we may have to think again.

Aucto Splendore Resurgo.
(3 down, 57 to go)

[Adam Davies]

Hi
This is an interesting area and as OT has pointed out no allowance is made for this in an IVA.
My suggestion would be a 1% interest buffer to be built into the monthly expenditure and if not needed to be paid over to the IP at the end of the year.
I would be interested to know how Melanie allows for it.
regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[ray_a]

The problem could be worse if a number of people are coming off fixed rate interest term mortgages and find that the repayments have increased considerably.

Surely then a variation would have to be made to creditors?

Interesting area!

[MelanieGiles]

Andy

As far as is possible, I try to ensure that my clients are in fixed rate mortgages, and if they are not then we generally try to help them do this from the beginning to buy certainty. Generally after the first two years, most clients appear to be able to absorb interest rate rises within their budgets - but your suggestion is a good one, and I think I might test that with creditors to see if they will buy in.

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

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

[ray_a]

If I could jump into the conversation, Sorry!, but could I be bold enough to suggest 2% as I think we are most probably still looking at two further .25% increases ie .5% as the Bank of England is not controlling inflation. Effesctively we are looking at 1.5% increase for the period from 01/08/06 to possibly 31/12/07.

Regards

Ray

[Oliver]

It will be very interesting to guage the creditors reactions of this. If there is a test case which anyone is involved in please update the forum.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[mondaynight]

THOUGHT SHOULD ALSO BE GIVEN TO OTHER SECURD LENDING WHICH IS ALSO ON VARIABLE LENDING. I HAVE NOT ENTERED INTO AN IVA YET BUT IF I CHOOSE TO DO SO WILL FACE COMING OFF A CAPPED MORTGAGE NEXT YEAR SO NEW RATE COULD GO THROUGH THE ROOF AND WITH A SECURED LOAN THAT HAS RISEN 3 TIMES THIS YEAR (TOTAL RISE OF £36) I AM CONCERNED ABOUT ENTERING AN IVA

[Adam Davies]

Hi
Make sure that you discuss with your IP how they are going to allow for any future rises in interest rates before entering an IVA.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[olympic_torch]

What i was trying to get to, but managing badly, was , if we can 'absorb' this extra expenditure until our first review, if the IP
sees that we have less coming in, can they adjust
payments down as well as up,as they would if we had more coming in, or does that take a variation?

Aucto Splendore Resurgo.
(3 down, 57 to go)

[Adam Davies]

HiOT
Any payments downwards need a variation meeting.However you could argue that any future overtime you earn is used to cover the extra cost of your mortgage before dividing it in half.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[olympic_torch]

Thanks Andy.
Unfortunately i do not get paid for my overtime, but the company is doing well at the moment and we have been paid 2 quarterly bonus payments, so maybe we can struggle through.
To add even more grey hair, daughter number 2 is now talking about moving out and setting up home with her boyfriend, which means we would lose her housekeeping payment.
hey-ho.

Aucto Splendore Resurgo.
(3 down, 57 to go)

[MelanieGiles]

I am always reluctant to rely upon childrens's board and lodge payments in IVA proceedings, as the likelihood of those continuing for a five year period are slim. Your IP ought to have made some provision within the proposal for this eventuality.

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

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

[olympic_torch]

The thing is. Looking at other people's circumstances on here, without the income from daughter number 2 i don't think we would have got the IVA anyway, and our monthly payments are amongst the lowest i have seen quoted on here.


Aucto Splendore Resurgo.
(3 down, 57 to go)