Remortgage IVA's End

[ashingtoon]

We have just had an IVA approved at 52p in the £1 over 6 years and we are very daunted at the moment! We have a mortgage at present of £140,000 and the house is worth roughly £170,000. We have an interest only mortgage and had hoped to revert to a repayment or buy into an ISA, however we realise we are stuck for 6 years or so. When we are asked to remortgage are we only allowed to apply for an interest only? Or can we apply for whatever mortgage we like.

We feel at the moment we are never going to own our house due to being silly enough to go for the interest only 2.5 years ago.

[carlmcmullen]

If your Disposable income allows it at the time i dont see any reason why you could not revert to a repayment mortgage.

[MelanieGiles]

Hi ashington and welcome to the forum

Having just had an IVA approved, and now worrying about the consequences, strikes me that insufficient thought was given to the implications of the procedure before the proposals were presented. Did your IP carefully explain this to you, and did you ask the questions at the time?

It is natural to worry once the burden is taken from your shoulders. Prior to the IVA all you can think about is - will it be accepted. What will I do if it isn't? Afterwards, I imagine there is a feeling almost of anti-climax, and a lot of my own clients tell me that they get worried because there is nothing to worry about, and then they go and find something. Perhaps this is happening to you?

The reality of your IVA is this. You are stuck with an interest only mortgage for the next six years, and presumably will be required to raise equity at the end as well. Once the IVA has concluded, you will have surplus income which you can then use to reduce your mortgage over time. There is no reason why you cannot source a repayment mortgage during the final year, but your repayments must be no more than 50% of your then surplus income - providing your IVA has been proposed along the current IVA protocol, or its predecessor versions.

[ashingtoon]

It's not that we did not ask questions! We were told that we had to attempt to remortgage with 3 lenders and if we were refused the remaining debt would be written off, we now suspect this may not be the case. We were also told our private pension payments would not be affected initially, however we have had to give them up and pay the IVA over 6 years as one of the creditors stipulated we had to or the IVA would fail.

[MelanieGiles]

Those are modification which were required by your creditors, over which your IP has no real control and were down to you to either accept or reject. At the end of the day, you probably felt that there was a bullet at your head, in that the IVA would have been rejected if you did not accept them.