I have 24 months left of my IVA, with £6,900 balance outstanding. I want to change to a Lifetime Mortgage, but lenders are reluctant to lend with a live IVA. I intended to use some of the house money to pay off the IVA balance outstanding, but I'm told that will make me liable to repay the whole £49,000 of the IVA, including interest & fees.
My house is worth £380,000 with an outstanding mortgage balance of £136,000. Is there a way around this IVA early settlement problem?
Assuming you have the standard terms, there are limits on releasing equity for the IVA. It is capped at 85% of the equity, as well as a term not exceeding state retirement age or the end of the current lending. Additionally, the repayment amount attributed to the sum released cannot exceed half of the IVA payment monthly.
I would be inclined to treat this as two seperate procedures: First an early release loan to offer up the remaining £6,900 in full and final settlement --- if this sum is actually 24 months payments it will need to be increased by adding the extra 12 payments in lieu of equity release.
Then, when the IVA has been done and dusted you can revisit the Lifetime Mortgage on your own terms, free of the arrangement.
I would suggest a chat with one or both of the brokers we have posting on the forum: Ryan and Shaun. Shaun, I believe, has dealt with early release loans before and, I imagine, Ryan will have too. They can be contacted through the details on their profile pages here: