mortgage without the massive deposit ?

[Viki.W]

[:0][:D] Ang. X

[nervousperson]

If your clause is anything like mine, then if you can't get a remortgage, your IVA will just continue for a further 12 months.

However, after the remortgage I'm unlikely to be able to afford the same level of payments. As such I'm not 100% sure I'd be able to make the target %age required to be paid back...

If I can't make the target %age divident as I can't raise the funds through remortgage as required by the relevant clause, does this mean I will then be declared bankrupt at the end of the IVA irrespective of my best intentions?

[MelanieGiles]

I am sure that this will not happen, so long as you can demonstrate that you have tried you best to find a mortgage and that this has not been possible.

[nervousperson]

I am sure that this will not happen, so long as you can demonstrate that you have tried you best to find a mortgage and that this has not been possible.

This is the modification that worries me..

A minimum dividend of XX pence in the pound must be achieved. Failure to achieve the minimum dividend by the expiry date disclosed in the proposal will constitute a default of the arrangement and the Supervisor must immediately:-
a. give notice (in accordance with such rule) that the arrangement has been terminated; and
b. forthwith, present a petition for a bankruptcy order to be made against the debtor

If I can't remortgage to 85% then I doubt I will meet the dividend...there's no way that an extra year's payments will make up the difference...

[Lisa2009]

Wow, thats harsh

[MelanieGiles]

That is a nasty modification, but if you cannot achieve the dividend there is nothing to stop your IP seeking a variation of that term to accept perhaps an extra year's payments in lieu of the equity - or better still that the IVA concludes with no additional funds.

There will be many people in the same boat through no fault of their own due to the repercussions of the credit crunch, so I would not worry unduly about this - and have a chat with your own IP to see how they would tackle this.

[nervousperson]

That is a nasty modification, but if you cannot achieve the dividend there is nothing to stop your IP seeking a variation of that term to accept perhaps an extra year's payments in lieu of the equity - or better still that the IVA concludes with no additional funds.

There will be many people in the same boat through no fault of their own due to the repercussions of the credit crunch, so I would not worry unduly about this - and have a chat with your own IP to see how they would tackle this.

There is one further modification which muddies the water a bit...

During the forth year of the voluntary arrangement the Supervisor is to obtain an independent professional open market valuation of the property at XXXXX. The property is to be re-mortgaged for no less than 85% of the open market value and the debtor's equitable interest from the re-mortgage must be paid to the Supervisor before the completion of the arrangement. If the debtor is unable to obtain a re-mortgage the arrangement may be extended by twelve months in order to allow contributions in lieu of equity. Should the debtor fail to introduce funds in respect of equity this will constitute a breach of the terms of the voluntary arrangement and the Supervisor must convene a meeting of creditors in order to agree an appropriate course of action.

What annoys me is my IP *must* have known that there were no lenders providing 85% LTV and didn't advise me of this, unless the 80% is a recent thing (last 18 months). That missing 5% is about £12k....

[nervousperson]

What worries me most is that the IP is one of the factories and appears to be sticking to the letter of the law..

Even though my I&E shows that I can't afford any extra payments (mortgage has gone up, new baby), because my salary has gone up slightly, they are demanding extra payments as there is a clause about 50% of any extra income on top of the *original* income...

So in effect, I'm approximately £150/month worse off than when I started the IVA 18 months ago...

PS Cracking site by the way - and sorry for the thread hi-jack

[MelanieGiles]

Up until quite recently it has been very easy to get mortgages of 85% loan to value for people in IVAs, so your IP is not at fault here. And at least this gives you the option of extending the terms to improve the offer.

[nervousperson]

I don't suppose you could decrypt exactly what this means..

introduce funds in respect of equity

Does this mean any amount needs to be introduced, or the full 85%?

[Viki.W]

nervousperson, if you can re-mortgage for 85% loan to value then the re-mortgage will firstly pay off your existing mortgage and then the remainder will go to the IVA. For example: your house is worth £100,000, your existing mortgage is for £70,000, you get a re-mortgage for 85% which is £85,000. The re-mortgage pays off the £70,000 and £15,000 is introduced to your IVA. If the equity in the house is less than £5000, you don't have to re-mortgage. I THINK I got that right but I'm sure an expert will advise you. X

[MelanieGiles]

That Viki is getting far too clever!!! I'll be out of a job soon and she is absolutely spot on! Couldn't have worded it better myself!

[Andrew Graveson]

I think there's bound to be a level of understanding from creditors on this matter.

Their operations have been affected by the lending difficulties currently so they do appreciate the issue. Don't forget as well that many of the creditors voting on variations are also mortgage lenders who have tightened their mortgage lending criteria.

Hardly fair to penalise a client for not completing an 85% LTV remortgage clause when your own mortgage lending operations offer no appropriate mortgage products to fulfill the clause.

[nervousperson]

nervousperson, if you can re-mortgage for 85% loan to value then the re-mortgage will firstly pay off your existing mortgage and then the remainder will go to the IVA. For example: your house is worth £100,000, your existing mortgage is for £70,000, you get a re-mortgage for 85% which is £85,000. The re-mortgage pays off the £70,000 and £15,000 is introduced to your IVA. If the equity in the house is less than £5000, you don't have to re-mortgage. I THINK I got that right but I'm sure an expert will advise you. X

Thanks, Viki.

A good answer, but reading your answer makes me reread my original question and realise it's too short to give the context in which I was asking it..

The property is to be re-mortgaged for no less than 85% of the open market value and the debtor's equitable interest from the re-mortgage must be paid to the Supervisor before the completion of the arrangement. If the debtor is unable to obtain a re-mortgage the arrangement may be extended by twelve months in order to allow contributions in lieu of equity. Should the debtor fail to introduce funds in respect of equity this will constitute a breach of the terms of the voluntary arrangement

Placed into the above context, does this mean that I have to remortgage to 85%. Using your example of £100k house and 70% equity indeed means I would have to pay 15k in should I be able to remortgage.

*However* should i not be able to remortgage to a full 85% (i.e. only 80%), do I then need to find the other 5k or is it a case of I only pay what I can over the following 12 months? (note that the figure are about 2.5 times this, so I have to find closer to £12k, which is over double what I would pay in based on my existing payment)

[MelanieGiles]

This will need to be addressed by a variation during the final year of the arrangement - as at the time this provision was introduced it could not have been forseen that people would not be able to get 85% loan to value mortgages.