My IVA started in Jan 2006. I know I have to pay in £10k at the end of my IVA by releasing some equity from my property. My current mortgage is £40k (approx) and I have a secured loan on the property for £20k. When I took out the IVA my property was valued at £80k.
When they informed me I would have to pay this money in I asked how would I get a remortgage and if I did I would want to also pay off the secured loan, and I was told we'll sort that out for you.
My IVA has changed to DebtFreeDirect and they sent me a letter yesterday asking for the progress with this £10k.
I am now worrying that I won't be able to raise the extra £10k because I won't be allowed to remortgage while I have this secured loan anyway. Can anyone give me any advice on the best step to take?
Last edited by chris1975 on Mon Apr 27, 2009 12:29 pm, edited 1 time in total.
I suggest that you speak to DFD and explain your worries to them.
The first thing I would do is to have the house valued - you may find that you don't have enough equity to release.
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It is likely that your IVA will have to be extended by up to 12 months as you cannot raise the equity but have not defaulted on the agreement. This is very common at the moment due to the lack of financing particularly for sub prime.
I'm sure that it says I have 12 months to pay the £10k if I can't raise it by remortgage, does that sound right. I will have to get the papers out tonight and read them properly
It is possible that the proposal says that and if it does then a variation will have to called. This would allow you to make 12 additional payments of whatever your current surplus is and this will be enough to close the IVA even if it is not the full £10k.
I've never missed a payment or anything and at the moment pay £256 a month - are the payments likely to remain this or will they go through the roof. I know I sound a bit naive but it's nice to finally find people who can answer questions like this for me!
The £256 should be acceptable for the additional 12 months. You will need to provide evidence to DFD that the money cannot be raise and creditors will see that you have complied in all ways. Obtain an up to date valuation and redemption figures which is all the information required to go to creditors. Speak to your case manager at DFD and explain the situation and what you propose and they should be able to put your mind at ease. Bear in mind that a sixth year of payments will work out far better for you in the long run than an increased mortgage would for the remainder of the term.
You have no idea how much of a weight you haver lifted from my shoulders. I thought I would have to be declared bankrupt because I didn't think I would be able to release the £10k.
If it started in Jan 2006, do I need to be looking at remortgaging now or when should I?
It is normally around the fourth anniversary so I would have all the necessary information in time for your annual review. There would be no harm in providing the info earlier so that DFD can propose the variation at the same time as they are sending out the annual review. This would keep costs down.
When these clauses were inserted into IVAs a few years ago, no-one could have forseen the credit crunch and the effects this has had on housing and accessibility to mortgage funding - especially in the sub-prime marketplace.
I am sure that creditors will accept an additional year's payments from you, if this provision is already part of your IVA - and if not, a quick creditors meeting to vary the terms ought to suffice. There are many people in this position at the moment.
I cant see many people in the next few years managing to secure a re mortgage . The housing market is realy going to have to bounce back in order for people to get anywhere near a 20% LTV ( assuming that most people who went into an IVA round about now had little or negative equity )
I might be wrong as I dont have a crystal ball but I think the housing market is going to be pretty static for the next 3 to 4 years .
