www.iva.co.uk

Hi
We started an iva in Jan 06 and successfully compleated in Jan 07. We are in an adverse credit mortgage and during 2007 we both able to get HP credit on second hand cars. We have now been told by a financial advisor that it is nearly impossible for us to get a mortgage as we have very little equity in our house and she is stating that we have a maximum loan to value of 80%. Since we entered the IVA our income has doubled. We were told by our IVA supervisor that after being out of the IVA for one year it would get easier to get credit but we are now finding it impossible.When can we apply for the IVA to be taken off our credit records and do you have any advice on how we can get a mortgage as we need to move?

Hi
Your IVA will be on your credit file until Jan 2012.
The subprime mortgage market has been hit hard and I believe that you will need a 20% deposit to be successful.
Regards

I am suprised that your IP told you that you would find it easier to obtain credit once it had concluded. IPs are not really in a position to comment on that particular area, and as Andy says the IVA will stay on your credit file for six years from the date of the creditors meeting.

Having said that, things have got a lot tougher in the mortgage marketplace over the last year, and this may not have been entirely predictable.

The mortgage marketplace is in a state of turmoil with lenders changing their lending criteria with little or no notice.

The key as Andy and Melanie have mentioned is going to be the loan to value the lenders offer.

Things will eventually right themselves but it is a case of sitting tight at the moment and ride out the rest of the storm.

Getting a mortgage whilst in an IVA has nevr generally been a problem, the loan to value is the critical element. There are deals available based on other criteria i.e. affordability etc at 75% but I believe things will eventually come good again. Tony

Hi all - this thread has just sent me into yet another panic. We have a mortgage which we have never defaulted on and the fixed interest rate ends next July at which time we will have to renegotiate our mortgage. We are with Amber Homeloans (part of the Skipton Building Society) at the moment. When making initial IVA enquiries in October we were told that getting a mortgage would not be a problem. MG and her team are now in receipt of our paperwork and an IVA proposal process is underway. In following the process we have had our house valued and it has dropped by nearly £15k in value which puts us close to the mark and obviously does not mean we have the full 10% deposit in the property that we started out with. HELP? Advice needed.....thankyou..xx

We will discuss this issue with you directly, but in the meantime there is no harm in contacting your mortgage company to see what they can suggest for you when the mortgage expires. With interest rates anticipated to fall even lower next year, you could be pleasantly suprised - but in any case the IVA needs to be structured to take account of any anticipated increase in payments.

The mortgage market at the moment is extremely twitchy about what it would deem to be a sub prime case if you are in an IVA. It was after all sub prime borrowing which was the cataylst in the US for all the problems we are seeing here in the UK now. Over there, lenders were advancing ridiculous mortgage based on someone saying, for example, they earned $50,000 a year, when in reality they were flipping burgers in McDonalds. (no offence intended to any posters on this forum that does this by the way, but you get the drift). Interest rates in the US at that point were 1%, and house prices were rocketing in value, so US consumers were tempted by loads of equity available in their homes, which they could release at low rates with little, or in some case no proof of income. I read an article once that there was a californian company charging clients $50 a pop to give them a piece of paper confirming that individual as a "consultant" of that company, earning "x" amount of dollars per year which they they used to get a mortgage. However, it all went belly up when the (typically) 2 year fixed rates came to and end, and in the meantime interest rates in the US had gone up to in excess of 5%, so homeowners were faced with their mortgage payments increasing by 400%, when they couldnt afford the borrowing sometimes even when rates were at 1%! Loads of defaults followed, UK banks had exposure to these so called "liar loans" in the form of what are known as CDO's, where bundles of these rubbish loans are packaged together and sold off in chunks as investment vehicles.
So now, in the UK, sub prime lending, self certification lending etc is very very difficult to get unless you have a sizeable chunk of deposit to put down. The last mortgage I took out was self certed, and done on a 95% LTV basis. This was 4 years ago, and I doubt whether I would get that kind of deal now. As as been previously posted on this thread, you really need a deposit of 20-25% at the moment if you are deemed to be sub prime, and even prime lending at the 95% LTV level if very difficult to get on a decent interest rate. You may be better seeing if your existing lender will just move you onto one of their other deals when your fixed rate expires. With Lenders under pressure to pass on the 1.5% base rate cut to consumers, you may find that you can get another fixed rate deal with them that compares favourably with your current deal. Hope this helps, and good luck.

Hi Melanie...okay have calmed down again (gawd help me!!) have just spoken to our mortgage company and all that will happen next year is our mortgage will switch to a variable interest rate which I guess could be favourable to us or could be more costly. This is kind of a relief because, in my ignorance, I thought that at the end of the fixed term we would HAVE to remortgage, when actually we dont. We can stay with our current lender but obviously we wont necessarily have a preferential lending rate. Obviously people remortgage at the end of their preferential term to get a better deal but in our case we may be better placed to stay put. But like you say Melanie, we can discuss this direct. I just read the above thread and thought "oh my god, property has decreased in value, we will hopefully be in an IVA and, oh no! we might lose our house next year!" - goodness I think I am a pretty happy go lucky kind of person (hence some of the reason for our debt! Lol) but this whole thing has had my nerves shot to pieces!! And to top I had the first credit card call (ignored the phone but knew the 084 whatever number was bound to be one of the credit cards!!) Yikes! xx

Try not to worry Fifi - all will be sorted in due course, and if you have any concerns just ring us directly and we will chat through them with you.

Sorry Hi Uptomyneck - your response came through after I had replied as above. But thanks. Amber dont give preferential products to existing customers - we would have to remortgage but by purely switching to the variable rate we may be better off or not hugely worse off next year (if what everyone says about dropping interest rates!). Obviously we will have to play it a bit by ear next year. But I just foolishly had it in my mind that the end of the fixed term meant the end of our mortgage agreement but it doesnt. I just have to pray that interest rates keep falling and then stay there for a while! But thanks so much for your info and advice..very grateful..xx

Fifilebonbon, the movement onto the SVR when a fixed rate ends is common practice, but you will find that your Lender will be keen to move you on to one of their current deals to tie you in to them for another fixed term. Whilst you are on the SVR, you are free to move to another Lender with no penalty, which your current Lender will not want. They do not know about your IVA, and your problems with moving elsewhere, so use that to your advantage and when your deal ends, ring them and ask what they can do for you. If you can lock in to a fxed deal that compares well with your current deal, it will give you peace of mind for future budgeting rather than sitting on the variable rate which could increase at short notice.

and thanks again Melanie...

Thanks again Uptomyneck - you have really put my mind at ease again....honestly I cant get over this wonderful forum and the most amazing people on here! Thank you so much!! So are you saying then that next year when the Fixed rate ends I dont need to mention anything about the IVA to lock into another of their products? Do you not need to go through the whole remortgage process to get a new deal?

No, you dont have to go through the whole remortgage process to stay with the same Lender, its a relatively painless operation to just move to one of their products they have available at the time. Remember, they want to keep you as a customer, and that gives you bargaining power [;)]. I'm sure you wouldnt have to declare your IVA (could one of the IVA experts confirm this?), as you took out your mortgage with them before you started the IVA process, and as far as they are concerned you have paid all your mortgage payments on time so you represent a good customer. They may have a minimum LTV for some products to get the best possible rates, but they are bound to have something that is more favourable than the SVR where your property value fits the criteria, eg in the 80-90% LTV bracket. It might be worth getting a free market valaution from a couple of local estate agents and compare that to your o/s mortgage to see what your current LTV is, and see what Amber are offering at the moment, bearing in mind their current products should get cheaper following the recent rate cut.

My mortgage company knew of my IVA - and it didn't come from me! They even did a 'drive by' valuation afterwards and charged us £65 for the privelige!