mortgage overpayment

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crowdog

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Post by crowdog » Sat Jul 24, 2010 8:57 am
I am still in my first year of and IVA and come september my interest free mortgage payments will fall quite a bit.
If wanted to know my best route from then on, if I overpay on the interest free mortgage what would that do? Should I remortgage? Sould I pay all the extra off my IVA?
I was thinking of paying the same amount on the mortgage but as an overpayment but my main concern is that I'm going to be stuck on the interest free mortgage for the next 5 years on a lower interest rate and have to pay much more into my IVA.
I have the 4 year clause in the IVA that takes any value from my house to pay my creditors so paying some off the mortgage would benefit my creditors? The house is worth about 5 to 10k less than we payed for it I will add, just don't know what to do for the best and thought I may get some different views on here..
Many thanks.
 
 

MelanieGiles

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Post by MelanieGiles » Sat Jul 24, 2010 4:05 pm
Hi there and welcome to the forum

You will need to seek advice from your IP on this matter. If you overpay the mortgage, you are effectively witholding monies which creditors are rightly entitled to share from - ie your disposable income will increase and I would imagine that you would have to increase your payments by 50% of that saving - this of course will depend upon the wording of your own individual proposal.

And of course repaying your mortgage on the basis of repayment, rather than interest-only, could well increase the equity in the property that you may have to raise during the final year.
Regards, Melanie Giles, Insolvency Practitioner
 
 

plasticdaft

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Post by plasticdaft » Sat Jul 24, 2010 6:47 pm
I asked about this and was told any money I saved on the mortgae would go into my trust deed(scottish IVA)(sort of).

As Mel says creditors could lose out 2 ways if you were allowed to overpay. Firstly through your dispoable income going up and secondly by the equity in your house increasing due to overpayment but not being able to release is due to lack of remortgae facilities(probably).

Paul

Paul
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
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