I'm looking into getting an IVA to help with my debts, I am in around £46k of unsecured debt. It seems too good to be true and I would like some expert advice before going ahead with it. I have just remortgaged for a 5 fixed term so the IVA would sort of go hand in hand with the new mortgage payments, however i've read somewhere about "Equity release" could you explain what this is? As I don't want the IVA to have a detrimental effect on my chances going forward of remortgaging. Also if i were to settle the IVA early would the equity release come into play, this side of things of slightly confusing.
You agree, as part of the arrangement, to explore the release of up to 85% of your share of the equity in your owned home. This exercise takes place towards the end of the IVA. If there is more than £5k available and you are unable to release equity the arrangement will be extended by a year.
There are several limits built in regarding the amount to be released: It has to be a maximum of 85% of your share of the equity. It has to have a repayment of less than 50% of the IVA payment at that time and the term of the release loan / remortgage cannot extend beyond the current mortgage term or state retirement age, whichever is the later. These last two will often take the amount to be released well below the 85% threshold.
If you finish the IVA early, maybe by way of a full and final offer, it is usual to assume that there will be equity to be released and to also assume the 12 month extension, basing the offer on remaining payments due plus 12 months. An offer made and accepted on this basis will override the equity release exercise ... and this is more likely to be accepted the earlier it is made.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
