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We are currently 2 1/2 years into our IVA. We have a mortgage with RBS. We have been offered a mortgage with a bad credit mortgage type company which will enable us to pay off our IVA now. This will be for £231,000. Our payments will go up to £1,000 per month in August on IVA and 50% of anything else applies.

We are not sure what to do. We will be signifiginatly better off for 2 years but then would move to the varialbe rate - what if we could not get a mortgage through a normal lender then and interest rates where high. Are you able to advise?

Tolond

Have you discussed the possible remortgage option with your IP? What company/lender is offering the new remortgage to you? It may well be the best option is to do what is best at this present time and then review the situation at the end of the preferential rate that your mortgage broker would be getting for you with the potential remortgage. Insist with your broker that there are no overhang penalties after any rate deals they may get for you, this basically means that if you take let`s say a 2 year fixed rate with another lender then at the end of the fixed rate period you can move away from them with little or no penalty(the norm seems to be 1 months interest at the end of the period to move away). Now if this is the option you decide upon and it`s acceptable to your IP then don`t go worrying about the "bad credit mortgage company" as you put it, there are a number of very good lenders out there who specialise in this type of lending and although they may have no high street presence the rates they will offer will be very competitive. It would be highly unlikely that you move straight to a high street lender in 2 years so this shouldn`t be a worry to you. With regard to the final point concerning future interest rates well nobody will know what they will be but so long as you take a mortgage deal with no penalty overhang you can then take another competitive rate at that particular time. Hope this helps,and best of luck.

Was the property included in your IVA - ie do you have a 4th year equity release clause? If not, the it seems to be a good idea to use the equity in the property now to get rid of the IVA. Your IP can put a suitable offer in front of your creditors, once an offer of re-mortgage could be sourced.

Good advice from Welsh Boy (who is a mortgage broker specialising in the adverse credit marketplace) with regard to rates. The mortgage marketplace is extremely fluid at present, and it is becoming more and more common for people to take fixed term products and then switch to better rates at the end of these. It is a gambol you take, but it would take away your debts for ever and bring freedom back into your lives.

Good luck and let us know what you decide to do.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Hi the company offerng is general Motors and we do not have a 4th year equity release, Thanks

Then it seems a sensible option to raise some money and clear your IVA - however do bear in mind that you will repay the increased mortgage over a much longer period than the IVA.

Ask your IP to provide you with a settlement figure based upon returning the dividend originally pledged, with a discount on their fees for future years. Then ensure that you do wish to take on a much longer commitment, for the benefit of clearing the IVA some 2 1/2 years early.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk