I am in month 56 of my IVA. Today I received a letter from my IP saying:
"Thank you for forwarding both your House Valuation and Mortgage Redemption Statement. We have calculated that the equity due in your arrangement is £5,171.37
It will be necessary for to seek a re-mortgage from your current provider, obtaining a mortgage rejection letter.
Clause (1.6) in your proposal that should you be unable to obtain a re-motrgage your IVA should be extended by up to 12 months."
ENDS:
I was expecting the equity to be close to £5,000 but I didn't realise just how close!
I know what I signed up to in 2010 and I accept a line has to be drawn somewhere but I wonder if there is some possibility of coming to an agreement given that the equity is only just over £5,000.
I am currently paying £372 a month into the IVA so an extra 12 months = £4,464.
For the purpose of my proposal, I have included an amount representing 85% of my future interest, by taking the current value of the property and inflating this by 4% per annum, to given indication of 85% of my interest in the property at month 54 of my arrangement. In month 54 of my arrangement, a valuation will carried out on the property.
If that valuation shows 85%% of my interest in the value of the property (after deducting the amount of the loans referred to above) is £5,000 or more, I will seek to re-mortgage my share of the property subject to the following conditions:
• The re-mortgage will be at a maximum off 85% of the value of the property.
• The costs of the re-mortgage will be deducted from the mortgage proceeds.
• The increased amount that I have to pay because of the re-mortgage will be deducted from the monthly contribution in the arrangement.
• The increased amount that I have to pay because of the re-mortgage will not exceed 50% of the monthly contribution in the arrangement.
• The amount of total equity release does not exceed 100% of the remaining outstanding debt (and statutory interest does not apply).
• If the increased amount that I have to pay because of the re-mortgage means that the dividends to creditors fall below £50 per month after fees, monthly contributions are stopped and the IVA is concluded.
• However, should I be unable to obtain a re-mortgage, the IVA should instead be extended by up to 12 months.
• By signing these proposals I consent to an application being made by the Supervisor to a restriction being placed at the Land registry on the register for the property or if appropriate a caution against first registration.
Foggy is right and it may be difficult now to change things as you sent the valuation and mortgage statement. At 75% loan to value you can raise over £5,000 so the IVA has to be extended. It is unfortunate but at least in a year you will be debt clear and all the equity in the property will be yours.
Value: £124,950 (carried out by independent surveyor)
85% loan to value: £106,207.50
Minus £95,864.76 for the mortgage redemption statement
Equity: £10,342.74
50%: £5,171.37 (it is a joint mortgage)
The fgures are right but pity the valuer did not drop the figure to £124k and this would have saved you a year's extension. Hindsight is great but I cannot see anything else that can be done other than the extension. However in a year there will be at least £30k equity in your property and you will be debt free.
Probably if the money would be available quickly. However given that creditors would get about £4,500 over the next year you would need to pitch it at a reasonable level to have a good chance of acceptance. Are you thinking of a third party or a small secured loan?
At a push, I think I could borrow about £3k from a family member. I'm open-minded about a small secured loan.
Obviously there are two things about being in an IVA. The actual financial bit - it would be brilliant to not be paying out £372 a month, but a reasonable reduction in that amount would also make a difference. And then there's just having that albatross hanging around your neck for so long - I feel like I can't move on with my life properly while I am still in an IVA.
The thought of it going on for another 12 months is really doing my head in! But I do appreciate that I've come a long way and that everyone going through this process will have had similar difficulties and challenges.
£3k might be borderline to swing it or a small secured loan around the £4-4,500 mark would. At least borrowing from family or by way of a secured loan you could reduce the monthly payment to a more manageable level even if it does take a little longer.
People do suffer from IVA 'fatigue' and just want to move on. This is completely understandable as no longer would you have to pay over bonuses etc and have to provide wage slips monthly etc. Hopefully you can get something sorted and if you are considering a secured loan give Shaun Vickery a buzz as he has access to these products for IVAers. If you can get the money from family interest free over a longer term then this would obviously be best but at least there are options.
As an aside… I don’t post on here very often but I do dip in quite regularly to read stuff and have always appreciated, and been impressed by, the advice offered by everyone on here – whether it be from those in the industry or those who have experience of being in an IVA.
It might be worth consider raising a small loan particularly if you are keen to conclude the IVA and move on. In around 12 months time you may well be in a position to re-mortgage and roll it up with a better rate on your mortgage too. Of course that depends on your own situation.
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