Shared Ownership Mortgage with an IVA

[gracey84]

I've been in my IVA for 2 years now with now with no defaults.

Me and my partner are looking at buying a property on a shared ownership scheme, we've done the maths and we can afford it, plus the bills with a few hundred pounds spare every month. This is including my monthly IVA payment of £381.

Does anyone know any mortgage companies that would offer a mortgage at a competative rate? I've found companies that would give us a mortgage if it weren't shared ownership, but at the time being this is all me and my partner can afford.

[abc]

I think you should speak to an independant financial advisor.

How will you fund the legal expenses and costs of moving etc?

You need to check your proposal for "after aquired assets" as the property may fall under this provision, albeit that you will struggle to release any equity as it is on a share ownership basis. You need to speak to your supervisor regarding the above point and also to obtain his permission for you to obtain a mortgage, this is classed as obtaining credit.

[gracey84]

My partner already has the money saved for all legal costs. My dad works with a storage and delivery company so there would be no moving costs either.

To take on the mortgage it would not be affecting the money I pay each month on my IVA. I don't want to go to my supervisor until I know i'd be in the position to do so. Especially as I would be charged for their time, I don't want to rack up my costs with them unless necessary.

[Adam Davies]

Hi
There are three good mortage brokers that post on this forum,Andrew Graveson,Tony and Mikebdomain.
With your IPs consent you are able to purchase a property post IVA.The after acquired asset will not affect you unless you sell the property whilst still in your IVA.Any deposit must come from your partner or a third party.
Regards

[gracey84]

Thanks for that.. would it be rude of me to approach them directly???

[MelanieGiles]

I know Andrew and Tony personally, and they would be more than happy for you to approach them directly.

I have to slightly contradict Andy, in that an after-acquired asset becomes an asset at the time of purchase rather than sale, but this is unlikely to be of issue to you given that your partner is funding the deposit, and that the balance is to be covered from a mortgage and retained ownership scheme.

You mention that you are likely to be left with some spare money once the house has been purchased, so be aware that this amy eventually result in your IP assessing your payments upwards at the time of his/her annual review.

[Adam Davies]

Hi Mel
Just to clarify the situation regarding purchasing post IVA,as we have had a couple of questions whilst you have been on holiday,the equity that you make in the property is safe from your creditors unless you sell during the IVA ?
Regards

[MelanieGiles]

Andy

After acquired property in IVAs is dealt with in accordance with the terms of the proposal - so posters should check their own documents if there is some uncertainty. It is most usual to follow the rules in bankruptcy, which state that any property which falls into the hands of the bankrupt prior to discharge must be declared as an asset of the estate within 42 days of its receipt. This would include a beneficial interest in a property - and not just equity released upon sale.

Section 14 of the new T&Cs relating to SCIVAs makes this more clear - if it is an after-acquired asset if forms part of the arrangement.

I will read with interest the earlier posts to see what has been said about this point by other forum experts, but from my own point of view I feel that there is no confusion.

[Adam Davies]

Hi
Well I'm confused Mel !!
If a property 'falls' into your hands post IVA then,yes,it is an asset and should be included.
However if you purchase a property post IVA, with your IPs permission and third party funds for a deposit,surely any equity made upto the end of your IVA can't be asked for by your creditors ?
Regards

[Adam Davies]

Hi Mel
Have a look at this thread
http://www.iva.co.uk/forum/topic.asp?TOPIC_ID=8940

[MelanieGiles]

Hmm

I can see where some of the confusion may arise, so will try to clarify how I see things from my own perspective.

1 During an IVA if an asset is acquired through either purchase or gift then it is an asset included in the IVA (so long as the terms of the IVA stipulate same) - which is most likely these days.

2 Defining what is an asset can, however, be quite difficult. For instance if the property is bought using a third party deposit - it is arguable that the third party owns the beneficial interest and therefore there is actually no asset at all - another argument is that the funders of ongoing mortgage payments acquire the appreciation, especially if the mortgage is on the basis of capital repayment and interest.

3 The problem arises when the asset appreciates and therefore who is entitled to claim the appreciation. The legal owners of the property, or the original investor. And this is something which may only be quantified upon a sale or re-mortgage - which may be rare during the lifetime of an IVA. In reality, I feel that most IPs would not bother to get the property revalued at the end of the IVA term, as actually buying a property during an IVA is quite rare.

4 My response to James' earlier post which was used in the thread on this subject whilst I was away, was based upon his partner funding the whole deposit, and hence my reply that his interest may only be quantified upon either a revaluation or sale.

I am sorry if my answer to that earlier post has influenced the advice given in a later thread to which I did not contribute to. If anyone is reading this and is seriously interested in acquiring a property during an IVA, I would seriously suggest that they get a letter from their IP confirming whether they deem the acquisition to form part of the after-acquired assets provisions.

Hope this helps to clear up any confusion, on what is clearly a very confusing but relatively rare issue. And that this also demonstrates that in the world of IVAs that there is sometimes no right or wrong answer, that each case has its own uniqueness and that a lot of issues are actually subject to the IPs own interpretation.


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