Protocol does not address this issue and clients can be exposed to remortgages with longer terms or even interest only. This would fit with the 50% of IVA payments but would prejudice the client over time.
No-one thinking of entering into an IVA should do so with the expectation that a further year's worth of payments will address the requirement to release equity by way of a re-mortgage. That must always be the ultimate aim, and IPs need to ensure that their clients have fully exhausted all avenues before relying on the fall-back solution.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by MelanieGiles
No-one thinking of entering into an IVA should do so with the expectation that a further year's worth of payments will address the requirement to release equity by way of a re-mortgage. That must always be the ultimate aim, and IPs need to ensure that their clients have fully exhausted all avenues before relying on the fall-back solution.
How would you address a scenario like mine where I have a mortgage which was granted when my income was higher and which clearly would never be granted based on my current income let alone extended. The ip was fully aware of the size of mortgage and my income yet still put within the IVA a remortgage increasing my mortgage by 13% knowing this would never happen..
How could they know that a remortgage could never happen for you nickjohn? And the terms of the IVA Protocol dictate that IPs should calculate the future re-mortgage ability - based on the loan to value of the property at the outset of the IVA and assuming 4% growth per annum. Although my firm uses the IVA Protocol pretty much for all of our cases, this is one provision which I feel is a complete nonsense and refuse to follow.
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by MelanieGiles
How could they know that a remortgage could never happen for you nickjohn? And the terms of the IVA Protocol dictate that IPs should calculate the future re-mortgage ability - based on the loan to value of the property at the outset of the IVA and assuming 4% growth per annum. Although my firm uses the IVA Protocol pretty much for all of our cases, this is one provision which I feel is a complete nonsense and refuse to follow.
Hi Mel, Whilst its true I do not have a crystal ball I know that when I took out my mortgage it worked out at less than 4 times joint income, it currently stands at just under 7 times joint income due to the drop in my income. Unless something fantastic happens to my income over the next twelve months I know of no mortgage deals whereby you can get a deal of 85% LTV on a joint earnings multiplier of some 7.5.
The only way we have managed to keep the house is due to transferring it to interest only (0.5% above base rate) before we entered the IVA, the bank tried to get it changed back when we entered the IVA but failed, had it not been for being interest only our IVA application would have failed and we would have been made BR.
As you can see its not always a cut and dried case of loan to value of property, the ability to raise the mortgage in the first place is as important..
NickJohn.
It is highly unlikely that you would qualify for a remortgage or a secured loan so an extension in your case is probable. However, there are people out there who have the means and ability to release equity and the IPs should at least look at each case to see what options are available. By reviewing each case creditors will then know that when an extension is requested it is because there is no way of releasing equity and not just a means to avoid doing so.
I think you have, over and above any of the other aspects of this debate, hit upon one of the single most important aspects: Multiples of income, when it comes to mortgage/loan affordability and lending criteria.
Even when the mortgage market was at it's most relaxed, I think the best you could get was 4.5x joint income. So I too have to agree: I cannot forsee a sitation where anyone is going to offer anything to customers with mortgages equating to 7x income multiples, no matter how much equity you have.
In these circumstances, I certainly cannot imagine my mortgage lender (presumably after refusing me a remortgage, when being required to attempt it), then giving permission to another company to secure further borrowing on the property.
My opinions are just that: Based on my experience and being a self-employed IVA customer.
Many thanks. A secured loan has not been suggested to me yet just if the 12 month extension is not agreed that I would be made bankrupt by Payplan as my IVA will have failed(although I have managed to get this clause removed).
