Told to take out a secured loan at extortionate rate. Please help.

[Gary.88]

Due to finish my iva nxt mth they want us to release equity in house. We applyed for remortgage and were declined iva want us to take a �10,000 secured loan out over 10yrs at an exstortionate 18.9% we feel this will plunge us back into huge debt and at 51 i dont feel confident i would be able to pay it off. We dont want to get back into debt again as we thiught an iva would get us out of it please can you help

[lifenoteasy]

The payment would work out to be £186.02 per month if there are no other fees and the interest is fixed.

The critical thing is whether your agreement allows this type of arrangement PLUS is this instead of you having a 12 month extension?

[Michael Peoples]

There are numerous threads concerning secured loans on the forum and ultimately it depends on what is in your proposal and what you feel is best for you. Taking a secured loan for £10,000 may well be cheaper than switching your entire mortgage to sub-prime rates [if this was possible] and it also can only be at half your IVA payment. This means the IVA ceases after five years and is not extended and you can then look to refinance in a couple of years when your credit file has recovered.

However your proposal may allow for an extension if a remortgage is not possible and many in IVAs prefer to extend for a year rather than take a secured loan. This is usually acceptable to creditors but check there is no minimum dividend requirement and the terms and conditions allow.

Newer Protocol IVAs mention secured loans as well as remortgages but the older ones do not so you need to speka to your own IP and find out what exactly your obligations are.

[lifenoteasy]

Additionally are you and your partner in an interlocking IVA, are both your names on the mortgage and how has the de minimis clause been worked out?

[longslog101]

these threads may be helpful




http://www.iva.co.uk/forum/topic.asp?TOPIC_ID=71208

http://www.iva.co.uk/forum/topic.asp?TO ... s=protocol

As mentioned all covered above by others but in general IVA with standard terms not bound by 2014 protocol onwards can not enforce a secures loan, only a mortgage foe the equity release or if that fails you get an extra year of payments (unless your IVA agreement says otherwise).

Be sure the valuation on your property is realistic. if it is be sure it has more than £5k equity per person in IVA in the in the mortgage, so if you both have Interlicking IVA's it must have more than £10k equity. (standard terms your agreement may say different) above threads show a forum user whose IP diem tried to suggest the £7,5k equity between the two of them was enough to trigger equity release, it wasn't. they suddenly turned out being very helpful to him, probably realised they coul have faced an upheld complaint !!

If after all the above and you agree you need to raise £10k of equity (by mortgage or whatever your agreement says) then decide if finishing now vs 12 months time on current payments instead would be better or worse for you instead of releasing equity (if your agreement says you can do this (or protocols you are bound by say you can) - rather than what customer services are telling you).

get the valuation and breakdown and calculation in writing that demonstrates you are liable for the equity release if it is the case. some people on her have complained about properties being over valued
to trigger the clause and then have their own done which miraculously brings them below the £5k each threshold and no equity release due.

be interested to hear the outcome.