Do we have to remortgage by using a sub prime lender

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Poethebald
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by Poethebald » Fri Nov 16, 2018 1:48 pm
Hi , my wife and I are 4.5 years into our post 2014 IVA. It has come to our attention that our IP can ask us to take out a subprime home owner loan if there is equity( which there will be) Our issue is that during the initial consultation this was not made clear. Remortgaing with high street lenders was highlighted but not the sub prime market.Having looked at our contract home owner loans are mentioned but not subprime lenders. If we had known this it is very doubtful that we would of gone down the IVA route as we could now be saddled with a further loan, over a long period , with a High APRC. This will mean we have wasted 4.5 years and could potentially be worse off. Is there anything we can do..
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Foggy
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by Foggy » Fri Nov 16, 2018 2:30 pm
The terms are, in a nutshell, if you can remortgage or (in post 2014 terms, if they are being used) obtain a secured loan, then you have to do it, regardless of status of the lender.

However, there are other limits regarding a remortgage in that the loan repayment cannot be more than 50% of the IVA payment, is based on 85% LTV and the term cannot extend beyond the latter of retirement age or the current mortgage term. As far as I can see the terms are silent on secured loans, but I would hope that the same limits apply.

The terms also state that "the debtor should be provided with a clear written explanation illustrating the possible net woth to be released ....."
Poethebald
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by Poethebald » Fri Nov 16, 2018 3:06 pm
Thank you for the response. If this is the case , the IVA company's need to be more upfront with customers who have equity in their homes. As I previously stated there was no mention of subprime lenders in the initial process or indeed in the contract. I foresee a large number of people being in our situation now the first of the post 2014 agreements are coming to term. It is ironic that in our proposal our IP has written that a debt management plan would take in excess of 16 years to complete and that an IVA would be a better solution. The irony being having completed 4.5years of our arrangement we are faced with the likely proposition of a loan for a longer period of time ,at a high rate of interest despite the protections outlined above.
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Foggy
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by Foggy » Fri Nov 16, 2018 3:55 pm
I agree and, to make matters worse, the debtor has no avenue of recourse or mediation open to them to arbitrate, should this be needed. I did, early this year, try to raise a petition about this, but the support was, at best, woeful :-(
Poethebald
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by Poethebald » Fri Nov 16, 2018 6:23 pm
I suspect that over the coming 12 months there will be more and more disgruntled individuals. As I stated previously, the post 2014 arrangements are now coming to term and there maybe a more substantive level of support. To my mind it is as blatant as the mis selling of PPI. Personally, I will be making complaints to the relevant authorities including the ombudsmen etc. I will also be contacting my MP as ethically it is reprehensible. The relevant IVA authorities note that the use of secured loans is not to leave the debtor with a loan that spans a long period of time. However, this is only guidance and a number of IVA providers appear to be ignoring it at best and openly flouting it at worse.
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