www.iva.co.uk

Can I ask a question of the forum please.

Our mortgage is reducing in March by £150.00. Our IVA co. have said that they are happy for us to continue paying the same amount to the Mortgage company, thereby increasing the amount of equity available to remortgage in month 54 (which more than likely wont happen, and we will therefore pay an additional 12 months… meaning ALL the equity will be ours).

However, today I’ve had an email saying:

“If your regular mortgage payment is lower your creditors would expect the monthly payment to your arrangement to increase. In that way the return to your creditors will be increased on a month by month basis rather than there being equity to release in the 5th year of the arrangement.”

Now, I’ve asked for clarity around this point, as it’s important. But is this saying that if we make the overpayments to the IVA (42 payments remaining @ £150/month… £6300) we will not have to look to remortgage at month 54 and we will end at month 60 as planned? That’s what it’s kinda suggesting to me.

Not sure what the best route to take now… do we make the payment to the IVA and increase the return to creditors (probably, morally, the thing to do) or do we make overpayments to the Mortgage and increase our equity (financially, long term, the thing to do)

Thoughts?

My initial thoughts are does your outgoings swallow up any of that extra money that is released due to the mortgage payment reducing, make sure your I&E is up to date and correct as things are ever increasing. So in fact it may not be £150 to be paid into the IVA.

It does loosely say to me no need to remortgage in month 54 however I would be insisting that this is in writing and signed as I'm not sure without the agreement of the creditors they can just remove the property from the IVA proposal and if house prices were to shoot up in the next x amount of months I think they'd still want to action that point in the proposal?

I stand however as always to be corrected so do wait for others to comment too.

I would be inclined to think that the payments should be adjusted and the property dealt with as normal in month 54. If this means no equity available then the IVA can cease and you can then use whateever money you like to reduce the mortgage balance. If your surplus has gone up then I would expect your IVA payments to increase when your surplus income does.

OK, so I’ve had a fairly speedy reply which is good.

They’ve confirmed that so long as my share of equity is <£5K we would not have to remortgage and the IVA would end, however if it is >£5K we would have to look to remortgage and if unsuccessful extend for 12 months.

Based on current valuations my share of equity is £4250 so it is an almost certainty that the equity share would be >£5K – with or without any additional overpayments we will make – just through natural price increases.

That being the case, I think we will stick to our original plan and make the £150/month overpayment to the mortgage company and increase our equity… and extend for a further 12 months at month 60 (paying an extra C£2400 into the IVA - or offer a F&F).

I cant see a reason (other than the moral aspect) as to why we would chose to pay the Creditors the extra £150/month ---- unless I’m missing something fundamental here?

I do not see this as a moral issue but is more to do with the terms of your proposal. If both you and your IP are happy then there is no problem but I do not think our proposals or terms and conditions would allow this. We would increase the payments at review time and then change them again as and when interest rates start to rise. The equity situation would then be dealt with as normal at month 54.

You seem to have gotten a good outcome for yourself so well done.