I would be grateful for some advice regarding switching back to a repayment mortgage from interest only. I switched to interest only not long before we applied for our iva as we were struggling. It was only meant to be a temporary solution to help us out but I couldn't switch back to repayment once the iva was accepted as we couldn't have met the minimum repayment. However our income has increased recently and we could now comfortably switch back to repayment plus pay a bit extra on our iva payments. We still have 17 months left on our iva agreement and my concern is that we have considerable negative equity on our mortgage and neither my husband or I are getting any younger. Do you think our creditors will allow us to switch back to repayment mortgage as long as we are still meeting our minimum payments? Thanks
If your income has increased and you wish to use your share to reduce the mortgage balance the IP will have no problem. However you could create equity which would mean your IVA gets extended so perhaps it would be better to save the money in the meantime until the IVA is over. You could then make a lump sum reduction after discharge.
It is also almost impossible to switch from repayment to interest only so if you have an interest only mortgage it might be more prudent to stay there and just overpay each month. At least then if something happens you are not committeed to the full amount each month.
As Michael says, I would save the money and repay a lump sum in due course. Not only will this prevent you from creating possible equity that the creditors will want a bite of, it also gives you a contingency fund to fall back on, during the rest of your IVA, in case anything blows up or breaks down.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
To be honest we would still be in negative equity anyway by the end of the term of the IVA, just slightly less so. I thought if we asked the IP if we could switch back to repayment then it would form part of our expenditure costs as it is a 'standard' item of expenditure, I hadn't realised that we would have to pay the additional cost out of our half of the surplus so it's probably not worth doing then as you say. Thanks for your replies.
There is no harm in asking the IP if you can use all the increased surplus to switch to repayment but I very much doubt it would be allowed unless your mortgage company demanded it.
