I have 9 months payments of £173.00 and in June I will have to get my house valued and a mortgage redemption figure. I will not be able to re-mortgage I expect my IP will ask for another 12 months payments. What I would like to do is raise the money by a secured loan to pay the last 12 months. Would this be possible. I would be looking to sell the house as soon as a get a completion certificate.
I think some IP firms can arrange a secured loan to raise funds for equity release but I think you should have a look at the cost of this against 12 more months of £173 as it may be cheaper for you in the long run to do this.
If you are only looking for very short term finance then the secured loan could be a good option to consider, but make sure there are no penal early settlement penalties built in.
Thanks for the replies. I do have a lot of equity in the property since the beginning of the IVA due to house price increases and inheriting my husband's equity in the property.
There seems to be a lot of discussion on the site about secured loans. Can I offer a word of warning about secured loans from personal experience.
You really need to undersatand the interest rate clause on a secured loan before signing or agreeing to anything.
I took out a variable interest rate secured loan on my property in 2005 at an interest rate of 8.4%. During the period between 2005 and the credit crunch in 2008 every single rise in the BoE base rate resulted in a rise in my interest rate until it reached a high of 10.3%. I thought fair enough it's variable rate and I signed, it will come down when rates fall. However only ocassionally was a reducton applied and that was because the clause had to be complied with and not because rates had gone down.
Here's the crunch. The BoE base rate as we know fell to 0.5% in 2008 and to some extent mortgages followed suit particularly trackers. However my loan did not follow the downward trend and no reductions were or have been applied to my loan rate in line with the BoE rate reductions. When queried the lender said that they did not have to reduce rates because the clause does not specifically state they have to. So my current rate is 8.4% when base rate is 0.5% exactly the same as it was in 2005 when the base rate was 5% That's it. No reduction in line with BoE base rate reductions but all increases applied as per the interest rate variation clause. So here's the warning, if you take out a secured loan at 11.9% today remember there's only one way interest rates will be going in the future and that's not down. If you fall foul of a clause like mine then if rates rise to what they were before the credit crunch i.e. about 5% you could end up on a rate of at least 16.9%, as they will have discretion to increase beyond any BoE base rate rise. Just be very careful guys when looking a these loans. Make sure you get good proper advice. I wish I had back in 2005.
It's certainly possible to achieve and, ironically, a high interest rate on the secured loan can actually benefit you where the repayments on the loan are limited to 50% of your IVA contribution. This is because the amount you can raise is limited by the monthly payment, hence when hopefully you review your mortgage arrangements (normally about 12 months later) then you can look at rolling the loan into your mortgage and you are paying off a smaller loan. There are pros can cons as always and the route you take is dependent on your own circumstances and preferences. It's important to choose a reputable lender and look at Early Repayment Charges. You may also be able to obtain a fixed rate on the loan if you are concerned about rates increasing.
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