Ok, so this is my question....if at the start of my iva I estimated that my current equity release is £13,000 and my debt is £10,000
If I continue the full IVA making my payments then they ask for the equity back to finalise my debt towards the end of my iva.
Am I right in thinking they can take all of the equity that is there £13,000 (or even more of what was estimated before say for example £25,000 ) plus all the payments made throughout the full IVA term even though those total figures combined add up to much more than the original debt itself?
Or is there a limit they would take out if your equity minus the payments already made to them?
During an IVA you always owe the full original debt, plus fees and possible statutory interest and payments, along with PPI refunds and equity release will continue until that sum is met, or the IVA comes to it's contractual end.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Foggy wrote:During an IVA you always owe the full original debt, plus fees and possible statutory interest and payments, along with PPI refunds and equity release will continue until that sum is met, or the IVA comes to it's contractual end.
Ok, so just to clarify and sorry if I'm sounding stupid.
So getting into an IVA with possible equity increase during the IVA term you will always be paying alot more than your original debt to start off with, so in the end I will loose out on alot more due to this?
But on the other hand trying to remortgage whilst in an IVA and to make sure the extra monthly remortgage payments do not exceed their set 50% is very low is that correct?
If I put in an early offer, how would I work this out? As there more than likely to decline if it's just the remaining IVA payments as they would be happy for me to try and remortgage in the end as they will make thousands of pounds is that right?
I entered into an iva nearly 6 years ago. we had £45k debt. We didnt have much equity (but still over the £5k mark). During that time we have made mortgage payments and house value went up so last year when doig our equity release figures we had approx £66,000. (house value minus mortgage outstanding). Equity release was based on 85% LTV so we still had over the £5k required to trigger the clause (think that put it around the £40k mark)
We went through the process and got a remortgage figure of £8000 to complete our IVA.
The point of my story is that Inwas dreading them saying we would remortgage the full £40k and had all these figures flying round in my head thinkin ‘but thats more than i owed’.
I remember being stunned and relieved when told it was ‘only’ £8000. There are protections and restrictions in place for what you can remortgage for. The monthly repayment has to be 50% less than you pay towards iva and you have to be able to afford to borrow. They do a full affordability check with you as its another mortgage and if dont pass you dont get the funds.
Theres no way if knowing what the figures will be until you go through the process. Things are changing daily and until you start crunching figures and seeing what you can borrow and how it works within the set guidelines you wont know. I was and still pleasantly surprised by the low figure required to finish our iva. We have wrote off thousands £££ of debt which we would have never been able to do without the iva. We still have a huge amount of equity which is ours for when we want to move house. And when we do the second mortgage will be paid off so we will move house and ONLY have a single mortgage payment as debt (and a £500 limit credit card).
Sorry for the long message but wanted to try and reassure you that they dont take every penny of your equity and the repayments have to be lower than your iva one. As Foggy said you always owe your FULL amount of debt not just what your iva payments amount too. so we owed £45k and more the while way through....not just the 60 payments that were planned for.
Foggy wrote:During an IVA you always owe the full original debt, plus fees and possible statutory interest and payments, along with PPI refunds and equity release will continue until that sum is met, or the IVA comes to it's contractual end.
Ok, so just to clarify and sorry if I'm sounding stupid.
So getting into an IVA with possible equity increase during the IVA term you will always be paying alot more than your original debt to start off with, so in the end I will loose out on alot more due to this?
But on the other hand trying to remortgage whilst in an IVA and to make sure the extra monthly remortgage payments do not exceed their set 50% is very low is that correct?
If I put in an early offer, how would I work this out? As there more than likely to decline if it's just the remaining IVA payments as they would be happy for me to try and remortgage in the end as they will make thousands of pounds is that right?
You should speak to an IP to understand how an IVA works and what will happen to your equity.
You can propose to exclude the property from the IVA completely. Often many standard term IVAs include a clause that if you cannot release the equity at the end of year 5 then your IVA will be extended for one more year.
You don't always pay back more than what you owe - you pay back what you can afford.
£10k is relatively low amount of debt for an IVA.
Perhaps another option would be better for you, depending on your circumstances.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
"If I put in an early offer, how would I work this out? As there more than likely to decline if it's just the remaining IVA payments as they would be happy for me to try and remortgage in the end as they will make thousands of pounds is that right?"
At the start of an IVA there is no way of knowing what equity might be available or, indeed, if it would be possible to release this equity come the time .... creditors do not assume they will get this. If making an early full and final offer most debtors assume there will be equity and that the 12 month extension will kick in ( that is the backstop arrangement) and so base the offers on the remaining agreed payments plus the extra 12. The majority of early offers are accepted, for various reasons.
And, yes, you might end up paying more than you owed, talking about the principal sums -- but don't forget that this is usually far less than the interest that would have been accumulating at loan contractual rates.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
abbiesmum2003 wrote:I entered into an iva nearly 6 years ago. we had £45k debt. We didnt have much equity (but still over the £5k mark). During that time we have made mortgage payments and house value went up so last year when doig our equity release figures we had approx £66,000. (house value minus mortgage outstanding). Equity release was based on 85% LTV so we still had over the £5k required to trigger the clause (think that put it around the £40k mark)
We went through the process and got a remortgage figure of £8000 to complete our IVA.
The point of my story is that Inwas dreading them saying we would remortgage the full £40k and had all these figures flying round in my head thinkin ‘but thats more than i owed’.
I remember being stunned and relieved when told it was ‘only’ £8000. There are protections and restrictions in place for what you can remortgage for. The monthly repayment has to be 50% less than you pay towards iva and you have to be able to afford to borrow. They do a full affordability check with you as its another mortgage and if dont pass you dont get the funds.
Theres no way if knowing what the figures will be until you go through the process. Things are changing daily and until you start crunching figures and seeing what you can borrow and how it works within the set guidelines you wont know. I was and still pleasantly surprised by the low figure required to finish our iva. We have wrote off thousands £££ of debt which we would have never been able to do without the iva. We still have a huge amount of equity which is ours for when we want to move house. And when we do the second mortgage will be paid off so we will move house and ONLY have a single mortgage payment as debt (and a £500 limit credit card).
Sorry for the long message but wanted to try and reassure you that they dont take every penny of your equity and the repayments have to be lower than your iva one. As Foggy said you always owe your FULL amount of debt not just what your iva payments amount too. so we owed £45k and more the while way through....not just the 60 payments that were planned for.
Best of luck x
Thank you so much for your time in replying to my question.
You really did make it clear for me lol so thank you.
I'm lucky enough for a 3rd party to make an offer for me, so fingers crossed they will accept.
Foggy wrote:During an IVA you always owe the full original debt, plus fees and possible statutory interest and payments, along with PPI refunds and equity release will continue until that sum is met, or the IVA comes to it's contractual end.
Ok, so just to clarify and sorry if I'm sounding stupid.
So getting into an IVA with possible equity increase during the IVA term you will always be paying alot more than your original debt to start off with, so in the end I will loose out on alot more due to this?
But on the other hand trying to remortgage whilst in an IVA and to make sure the extra monthly remortgage payments do not exceed their set 50% is very low is that correct?
If I put in an early offer, how would I work this out? As there more than likely to decline if it's just the remaining IVA payments as they would be happy for me to try and remortgage in the end as they will make thousands of pounds is that right?
You should speak to an IP to understand how an IVA works and what will happen to your equity.
You can propose to exclude the property from the IVA completely. Often many standard term IVAs include a clause that if you cannot release the equity at the end of year 5 then your IVA will be extended for one more year.
You don't always pay back more than what you owe - you pay back what you can afford.
£10k is relatively low amount of debt for an IVA.
Perhaps another option would be better for you, depending on your circumstances.
Hi Lisa,
Thank you for your response, yes I should have done my research before getting into an IVA especially reading what other people's debt come too.
It's a big mistake that will never happen again. However, it's been a very good but hard learning curve too.
