Is a secured loan the same as a remortgage ?

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Desperado 77

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Post by Desperado 77 » Tue Jul 15, 2014 5:39 pm
Hello,
Wonder if you can help?
This issue has been brought up on here before by myself and others. Last payment of IVA due to be paid the end of this month. I Have IVA protocol from 2008 where it states remortgage or a maximum of 12 month extension . . however IP has said we should take out a secured loan.We have said no, it should be what is in our terms and conditions . . ie, if cannot remortgage ( which we can't) then it should be another 12 months. . They said they would terminate the IVA (after paying for 58 months!) They asked if we could get funds from anywhere else and in order to complete this asap ( it is having a very negative effect on every aspect of our lives) we offered £4500 which we could borrow from a third party in order to complete it. IP is now saying they are applying a three month extension as we have requested a variation ( the £4500) and they are waiting on word back from MR Prigent at TIX on whether a secured loan is the same as a remortgage or not. . .so we are in a state of constant worry and were really hoping this could be finalised around the same time as the final 60 month payment. By the way, the £4500 full and final offer is approx £1300 more than what an extra 12 months at current payments.Any help would be greatly appreciated
 
 

Foggy

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Post by Foggy » Tue Jul 15, 2014 5:55 pm
Hi. The general consensus is that a remortgage and a secured loan are not the same thing --- it is not up to TIX, or any other creditor / representative to make that call.

It really depends on how far you want to push this, but, if no agreement can be reached I would turn to the regulatory body for opinion.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
 
 

UpToMyNeckInIt

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Post by UpToMyNeckInIt » Wed Jul 16, 2014 3:36 pm
Desperado,

Stick to your guns, you are correct in that you realise that there is a difference between a 're-mortgage' and a 'secured loan', and that you cannot be compelled to take out the latter. (I am assuming you have a protocol compliant IVA with standard terms, and that you are not a DFD customer who has been hood-winked into signing up to the 2014 protocol).

It is not unreasonable for you to expect your IVA company to honour THEIR contract (they drafted it, you merely agreed the terms - as did the creditors). An IVA is a legally binding contract - on all sides.

Hence, no IVA customer should be compelled to take out a 'secured loan', when the IVA contract has no provision for equity release by this means.

You can quite rightly opt for the 12-Month extension (and what with your IVA company piling on the stress, I would take your more than generous offer off the table as well).

The only time you would want to consider the secured loan route is IF you are unlucky enough to be offered a remortgage as per your IVA terms: Then it may be cheaper to take out a sub prime loan for a relatively small amount at say 20% APR, than to remortgage the entire debt on your property at presumably a naff rate (say 9-10% APR).

Presumably, in the event of a remortgage offer, the customer cannot 'opt' for a 12-Month extension, but could offer to release the same amount of equity by way of secured loan instead. A decent IVA provider would I assume run all of the options past the customer, advising them of the best option in these circumstances.

Good luck, and let us know how it goes.
My opinions are just that: Based on my experience and being a self-employed IVA customer.
 
 

bridgey

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Post by bridgey » Wed Jul 16, 2014 3:58 pm
NO!! Secured loans are NOT the same as a Remortgage and whoever is telling you that they are, need shooting... ore more importantly, reporting.

A secured loan is a Loan that is secured against your property, over and above the Mortgage. You will effectively have 2 loans (the mortgage, and new Loan) attached to the property.

There is nothing wrong with this, per se, but they are not the same thing:

http://www.moneysupermarket.com/loans/d ... -mortgage/
Half the lies you tell aint true
 
 

Til

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Post by Til » Wed Jul 16, 2014 4:03 pm
I may be wrong but I'm sure I recall Melanie posting on here that she had had legal confirmation that a 'remortgage' is not the same as a 'secured loan'.

I may have dreamt it though.

Unless you signed up to a later protocol (eg. the mass variation DFD sent out asking everyone to change to the 2014 Protocol) I don't see how these 2 different financial products could be considered the same and you should insist that your IP honours the terms of your agreement or complain to their regulator.
"Hope is the feeling you have that the feeling you have isn't permanent." - Jean Kerr

IVA approved Aug 2008 - 6 year term - last payment made 6 Oct 2014. CC received 14 Nov 2014.
 
 

bridgey

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Post by bridgey » Wed Jul 16, 2014 4:10 pm
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by bridgey

NO!! Secured loans are NOT the same as a Remortgage and whoever is telling you that they are, need shooting... ore more importantly, reporting.

A secured loan is a Loan that is secured against your property, over and above the Mortgage. You will effectively have 2 loans (the mortgage, and new Loan) attached to the property.

There is nothing wrong with this, per se, but they are not the same thing:

http://www.moneysupermarket.com/loans/d ... -mortgage/

What I should have said here, is that a Mortgage is a form of Secured Loan... but what I think you're getting at is a ANOTHER Loan secured against the property (a second charge) in addition to the Mortgage (first charge).
Half the lies you tell aint true
 
 

Michael Peoples

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Post by Michael Peoples » Wed Jul 16, 2014 4:39 pm
It is difficult to say anything without knowing the exact terms of your IVA and modifications. Not all IVAs are automatically extended if a remortgage is not obtainable and quite often the IP has to go back to creditors for a variation. This usually entails an extension and creditors normally accept but if the creditors are advised that the client has the means and ability to obtain a secured loan but has refused they may look differently at the case.

I would be careful about digging the heels in unless you are 100% sure of your ground. While a remortgage and a secured loan are different products the end result is the same for creditor and debtor alike. It is also a breach of the arrangement to refuse any reasonable request of the supervisor so taking a complaint to the regulators based solely on the words remortgage or secured loan could be very risky.

In essence if the IP can automatically extend the IVA then you should be fine but if the IP has to call a variation there is a possibility that creditors may reject the extension. If in doubt seek legal opinion but do not assume that you are entitled to an extension as this may not be the case.
Michael Peoples | McCambridge Duffy Insolvency Practitioners
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MikeyM

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Post by MikeyM » Thu Jul 17, 2014 7:17 am
Apparently not according to what the judge said in the case referred to here

http://www.iva.co.uk/forum/topic.asp?TOPIC_ID=66419
 
 

MelanieGiles

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Post by MelanieGiles » Fri Jul 18, 2014 1:13 am
Categorically - a re-mortgage and a secured loan are not the same thing. I have Counsel's opinion on this, and for any IP to try and argue that they are is on dangerous territory.
Regards, Melanie Giles, Insolvency Practitioner
 
 

Michael Peoples

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Post by Michael Peoples » Fri Jul 18, 2014 9:45 am
I agree that secured loans are not remortgages however I also feel it is very dangerous for some posters to advise others not to comply with the requests of the supervisor.

We do not know the terms or their IVAs and any modifications proposed especially where the supervisor has to call a variation when no remortgage can be obtained. Creditors may reject an extension when the clients have clearly the means and ability to raise equity but refuse point blank to do so and complaining to the regulators will do no good.

If in doubt get legal opinion but do not refuse a request from the supervisor based on the assumption that you are automatically entitled to an extension. This may not be the case.
Michael Peoples | McCambridge Duffy Insolvency Practitioners
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Foggy

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Post by Foggy » Fri Jul 18, 2014 10:13 am
Completely agree, Michael. I appreciate that the actual wording needs close examination, but, in this particular case, the OP has stated that their clause is (paraphrasing) "attempt to remortgage or, if unable to re-mortgage, a 12 month extension will be applied in lieu".

It appears that the IP is attempting to change the terms to force a secured loan, which is simply not on, being contrary to the (as we have been told) agreed terms.

A complaint to the regulators would be indicated it the IP is not adhering to the agreed terms and is acting unreasonably.

Yes, the debtor is obliged to comply with reasonable requests --- however, being co-erced into acting against the agreed terms is not reasonable.

The opinions expressed by the various posters in this thread are based upon the specific terms expressed by the OP and, yes, I would emphasise that this advice would not always apply in other cases.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
 
 

Michael Peoples

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Post by Michael Peoples » Fri Jul 18, 2014 10:30 am
I take your point Foggy but if that is the case in this instance there is no need for a variation to be called as the extension would be automatic. The posters could in these circumstances demand what had always been agreed and perhaps legal advice or a direct word with the IP might suffice.

My main concern is where a variation has to be called and the extension is not automatic. There is no doubt that some creditors would look unfavourably upon any client who refused to release equity despite being able to and where the repayments would be in line with the protocol remortgage terms.

I do also agree that people should not be bullied into anything but I go back to the issue of refusing a 'reasonable request of the supervisor'. If a client has signed up to releasing money by way of a remortgage and this is not possible but they can source the same funds by way of a secured loan for 50% of their surplus income is it a reasonable request to ask them to do so?

This would be for the courts and regulators ultimately to decide and may come down to what a judge deems 'reasonable' and not semantics over the terminology 'remortgage' and 'secured loan'.

Personally I believe that there is a place for secured loans and given that the IPs are paid on realisations I can fully understand why many are going down this route. In another post the equity available at 85% ltv is approx £10k and if raised the IVA would cease after five years. The alternative is an extension of 12 months at £306 per month. The difference to the IP firm is huge as you get £1500 realisations plus probably a £300 variation fee if the equity is released whereas you get £551 for the extension. This is a massive difference for a years less work!
Michael Peoples | McCambridge Duffy Insolvency Practitioners
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Foggy

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Post by Foggy » Fri Jul 18, 2014 11:04 am
We are roughly on the same page, Michael. And ALL depends upon the wording of the individual arrangement. Whilst it might be reasonable to expect a large sum of equity to be made available by alternative means, it is also reasonable to expect the IP to adhere to the contract, which, in this particular instance, offers the agreed alternative of an extension, upon which this particular IP is attempting to renege.

Like it or lump it, these situations will be cleared up, to some degree, with the new protocol wording, if that is what suits the individual cases as they come up for proposal.

My overriding concern is the number of queries coming out of the woodwork, on a particularly important matter for home owners, which appears not to have been explained to any degree in the initial stages. I am reasonably certain that equity release doesn't come as either a complete surprise, or a mystery, to your clients, nor those of Mel's team.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
 
 

Foggy

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Post by Foggy » Fri Jul 18, 2014 11:06 am
Oh, and I might add .... the difference between a secured loan and a re-mortgage is not a matter of semantics :-)
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
 
 

Michael Peoples

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Post by Michael Peoples » Fri Jul 18, 2014 11:20 am
True Foggy. Maybe it is not semantics but my point was it may not be relevant to discuss remortgage/secured loan if the argument is over ' a reasonable request'.
Michael Peoples | McCambridge Duffy Insolvency Practitioners
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If you would like to talk to me about proposing an IVA or have any questions at all please visit www.mccambridgeduffy.com
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