What will happen in the final year of my IVA. I am unable to get a remortgage, but have been asked to take a secured loan for 15 years, which I do not want to do. My paperwork explains that I could extend for a 6th year. What will happen at the end of the 6th year - would any amount remaining be written off?
Some people are happy to take the loan as the payments cannot be more than 50% of the IVA payments. This makes things easier for a time and the intention is then to remortgage everything down the High Street within a couple of years.
You may not be obliged to take the loan and it could just be an option but there may be other things such as a minimum dividend which needs achieved so ask your own IP.
I would say that, although you should not be obliged to go down the secured loan route, it is always worth getting the figures worked up for you so then you are fully aware of all options.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I personally entered an IVA to come out the other side debt free not with a secured 15 year loan! I wouldn't be happy but as others say crunch the numbers as it may be beneficial in the long run.
IVA final payment left the bank on the 26th January 2013...looking forward to a debt free future.
I think the fact that the loan payment can only be 50% of your IVA payment is irrelevant. In may case that would be over 700 per month. And I dont fancy paying that even if I could afford it.
It is also very dangerous to assume you can remortgage at high street rates in a couple of years. there is no guarantee of this.
There is no guarantee of anything Mole but if you qualify for a secured loan now you should be able to move things to the High Street in a couple of years provided there are no changes in circumstances. However that will not apply in all cases and I am not a financial advisor so whoever does obtain the loan will be able to explain all the pros and cons.
If you are able to obtain a remortgage in month 54 your payments could increase by up to £700 per month anyway and your entire mortgage switched to sub prime. If you manage to get a reasonable rate you could strip out equity up to 85% of your property's value and this is the agreement most people signed up to. The term of the mortgage could be extended to maximise the amount of money for creditors if your proposal is under the old protocol so a remortgage may be a lot worse for people than a secured loan.
Ironically a higher rate of a secured loan may actually work in your favour for a few reasons. Firstly, the loans are only usually available to 80% loan to value so 20% equity remains for you and not 15%. Secondly the higher cost of the loan means less equity can be realised on an affordability basis so the amount of equity left in the property will probably exceed the 20% figure anyway. And finally, your existing mortgage would not be touched so you can remain in whatever tracker deal you have and the term cannot be extended.
Secured loans are not ideal for everyone but they certainly have their place.
