Help...calculations for potential remortgage.

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Poethebald
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by Poethebald » Mon Nov 19, 2018 5:32 pm
Hi, we are currently getting our figures together for our IP 're the equity in our home. The value of our home is 162,000 and we still owe 115,000 on the mortgage. Our monthly payment into the IVA is £214. Does anyone know from these figures if it is likely that we will be asked to take out a home owner loan? We have 20yrs until retirement.I understand that the max cost per month can only be half of our IVA payment, but the rest of the calculations have me at a loss. We are very concerned that we could end up with a loan with significant interest for a period of 20 yrs.Any guidance would be welcome.Thank you in advance.
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Foggy
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by Foggy » Mon Nov 19, 2018 6:24 pm
Poethebald wrote:
Hi, we are currently getting our figures together for our IP 're the equity in our home. The value of our home is 162,000 and we still owe 115,000 on the mortgage. Our monthly payment into the IVA is £214. Does anyone know from these figures if it is likely that we will be asked to take out a home owner loan? We have 20yrs until retirement.I understand that the max cost per month can only be half of our IVA payment, but the rest of the calculations have me at a loss. We are very concerned that we could end up with a loan with significant interest for a period of 20 yrs.Any guidance would be welcome.Thank you in advance.


You have sufficient equity to trigger the clause and can only borrow ( if this proves possible) up to 85% of the homes value, so £137,700. Taking off what you owe would leave up to £22,000, depending on the extra repayment being less than £107 per month and the term nor being extended beyond the current term or retirement age, whichever is the latter. If you are on the post 2014 Protocol terms and a full remortgage, as above, turns out to be impossible, they could ask you to look at secured lending, up the the £22k. If you are on pre-2014 terms they cannot force a secured loan, but such a loan could work out cheaper than a full remortgage, if you manage to get a remortgage offer, so worth exploring for comparison. The best outcome (if somewhat tedious) would be to be refused a remortgage and be unable or not obliged to take out a secured loan, leading to 12 month extension.
Poethebald
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by Poethebald » Tue Nov 20, 2018 6:30 pm
Hi Foggy, thanks for the response. We are post 2014 and our IP did not mention that we would have to approach lenders who deal in adverse credit when we discussed the IVA before signing.Nor is it specified in the contract.If it had been , we would not of considered an IVA.Thats a battle we will be having in the near future. I have an interlocking IVA with my wife, I understand that due to this our equity in our home is 50/50. So we should both get the £5000 relief? Our IP is saying because it's a joint IVA(no such thing as I understand it) we will only receive £2500 each in relief.Is this usual practice? Thirdly ,our IP has stated in their own contract that a Debt Relief Order would not be suitable because it would take 16 years to pay and we could not possibly plan that far in advance. However, they could now force us to take a 20 year loan to squeeze as much money from us as possible.That is not fair, reasonable or potentially affordable as many of these loans are high interest on a variable rate.
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Foggy
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by Foggy » Tue Nov 20, 2018 7:07 pm
I appreciate the points you raise, Poethebald, but the terms just say remortgage or secured loan -- they make no reference to the source or the rate. Up to the 2014 Protocol it was a moot point as the only option then was remortgage, which was nigh on impossible. The introduction of the secured loan option changed this --- I agree it is perverse -- after all many could simply have taken out a loan at the start and not bothered with an arduous IVA for nought !!

The arguement most IPs will quote is that, yes a secured loan could be at adverse rates but, when the is cleared from your files a year or so you can re-finance at High Street rates (or at least try to).

The £5,000 you refer to is not "relief" it is the trigger figure and, yes, most IP's accept that 2 interlocking IVA's should give each person the £5k as a trigger on their share -- but a few, as yours, do not accept this arguement and no-one in an IVA can afford to take it to court for a ruling. In any event -- even giving you £5k each the equity is in excess of £10k so the clause is still triggered.

Are you with Aperture, by any chance ?
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kallis3
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by kallis3 » Tue Nov 20, 2018 7:12 pm
A DRO would be no good anyway as you have a house as an asset. You can just ask for an extension rather than a secured loan
Poethebald
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by Poethebald » Tue Nov 20, 2018 11:28 pm
Hi Foggy , no we are with Johnson Geddes. Our preferred route would be the extension to the sixth year and when we took out the IVA that's what we were led to believe would happen. To ask individuals who are trying to break a cycle of debt,to take out sub prime loans ,when they have struggled for 4.5 years is abhorent. As you rightly point out, the term does not indicate the source or the rate of the loan/remortgage.That is my very point, we were told not to worry as high street lenders would not give us a remortgage and we would go into a sixth year.Neither does the contract say that we have to use sub prime lenders.In short we were mis led. The more I discover about IVAs , IPs , the loosly worded contracts that can be interprited to suit the IP in most cases....It is glaringly obvious that this is more about profit for IPs and not assisting individuals out of cycles of debt.This sector needs much tighter regulation as it would appear that some company's / IPs are deliberately mis leading people when they are at their most vulnerable.Which in my opinion is completely unethical. Kallis, I hope that's the way things will go, but after reading people's comments on this forum I doubt that that will be the outcome. Thank you both for your advice. It looks like we are going to have a battle in the coming months.
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kallis3
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by kallis3 » Wed Nov 21, 2018 7:43 am
I hope you manage to get things sorted.
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Foggy
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by Foggy » Wed Nov 21, 2018 8:54 am
Poethebald, I, again, agree. I think it is a criminal oversight in the legislation and regulations that there is no provision for debtors to have access to mediation, resolution and restitution when things go awry. Added to which they are pretty much "trapped" when the arrangement is accepted and IP's are basically self-regulated.
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Ryan
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by Ryan » Wed Nov 21, 2018 9:44 am
If it is just the re-mortgage (not secured loan) route that they are looking at as has been said previously if it were possible it would mean the whole new mortgage probably being at a much higher rate than you are currently paying. If that's not your preferred option we have provided a letter previously for Clients saying that a re-mortgage isn't possible and that has been accepted by the IPs and lead to the 12 month extension being applied.

Regards
Poethebald
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by Poethebald » Wed Nov 21, 2018 9:48 am
Thank you both. I will let you know what happens.I intend to contact the appropriate authorities and my MP, if necessary. It maybe arduous but it's a battle I'm willing to have.Vulnerable individuals should be protected from shoddy practice such as this.
Poethebald
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by Poethebald » Wed Nov 21, 2018 10:00 am
Ryan wrote:
If it is just the re-mortgage (not secured loan) route that they are looking at as has been said previously if it were possible it would mean the whole new mortgage probably being at a much higher rate than you are currently paying. If that's not your preferred option we have provided a letter previously for Clients saying that a re-mortgage isn't possible and that has been accepted by the IPs and lead to the 12 month extension being applied.

Regards

Hi Ryan, thank you for your response.Our IP is pushing for the secured loan option with adverse credit lenders.This is because ours is a post 2014 arrangement. We are not happy as when we took out the IVA we were not told that we would not have to approach this type of provider.We were told that high street lenders would not accept us for remortgage so would go into the sixth year. The contract does not mention adverse credit lenders either. Basically as I've stated above we were mis led and it is ethically wrong for a number of reasons. E.g. 4.5 years in an IVA to be told that we potentially need to take out a substantial loan , at a high rate of variable interest over a twenty year period.Therfore making us worse off in the long term and potentially forcing us back into a cycle of debt.
Poethebald
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by Poethebald » Wed Nov 21, 2018 10:03 am
Ryan wrote:
If it is just the re-mortgage (not secured loan) route that they are looking at as has been said previously if it were possible it would mean the whole new mortgage probably being at a much higher rate than you are currently paying. If that's not your preferred option we have provided a letter previously for Clients saying that a re-mortgage isn't possible and that has been accepted by the IPs and lead to the 12 month extension being applied.

Regards

Sorry Ryan.That should of read....we were not told that we would have to approach adverse credit lenders.
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Shaun Vickery
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by Shaun Vickery » Mon Nov 26, 2018 1:45 pm
A higher interest rate may (ironically and uniquely in this situation) actually suit you due to the way that the IVA protocol works. It is designed to ensure that payments will be affordable to you by limiting the increase in your monthly mortgage commitments to being no higher than 50% of your IVA contribution. A higher rate therefore means having to release less equity from your property. My advice would be to find out all your options before necessarily assuming this to be a bad thing and you can then make an informed decision on your next steps.
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Foggy
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by Foggy » Mon Nov 26, 2018 2:25 pm
Shaun Vickery wrote:
A higher interest rate may (ironically and uniquely in this situation) actually suit you due to the way that the IVA protocol works. It is designed to ensure that payments will be affordable to you by limiting the increase in your monthly mortgage commitments to being no higher than 50% of your IVA contribution. A higher rate therefore means having to release less equity from your property. My advice would be to find out all your options before necessarily assuming this to be a bad thing and you can then make an informed decision on your next steps.


An interesting perversity meaning that, once the credit files have cleared, there will be less to have to re-finance at the lower rates then available.
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Shaun Vickery
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by Shaun Vickery » Mon Nov 26, 2018 3:08 pm
Precisely! It depends on the individual circumstances of course but very often that's the case.
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