Mortgage Prisoner

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Coline81

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Post by Coline81 » Thu Nov 19, 2020 1:03 pm
Hi - I've had a letter from my existing mortgage company outlining that I am basically a 'mortgage prisoner' and should be able to move my mortgage to a better deal. I'm currently on an interest only mortgage, have never missed a payment apart from due to a coronavirus break as my husband is self employed and have more than £60k left on the mortgage. I am 3 years into an IVA is it still possible for me to move to a better deal and does anyone have a contact that is best suited to help me in my situation? Thanks in advance.

Foggy

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Post by Foggy » Thu Nov 19, 2020 1:24 pm
It is unlikely that you can move lenders, but your current lender might be open to offering you a better deal. Maybe a word with Ryan or Shaun would help -- they are both whole of market mortgage brokers with experience in adverse credit. Their contact details can be gleaned from their profile pages here:

Ryan: memberlist.php?mode=viewprofile&u=18488

Shaun: memberlist.php?mode=viewprofile&u=22837
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
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size5

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Post by size5 » Thu Nov 19, 2020 2:40 pm
Hi,

It depends on which way you look at it, and a better deal is not necessarily in your best interests in many ways. If you do get a better deal, you may end up being no better off when it comes to annual review time, as your outgoings will have gone down, so your IVA payment may go up accordingly. In the meantime, any savings are yours to keep so there is a slight advantage there as this will only be flagged at annual review and not before.

Notwithstanding that, I am going to make the assumption that you are on a protocol compliant IVA and therefore are subject to the standard equity release clause. I am also going to make the assumption that, in an ideal world, you would prefer to NOT have to release equity when the time comes, rather just do the extra 12 months payments. I am not a mortgage broker, so by all means speak to experts on the matter, but, generally, 3 things are important when you are looking at any form of secured lending.

Firstly, credit rating. This will of course be adversely affected by the IVA. Secondly, available equity in the property. You cannot be sure what that will be when the time comes, but you may have a fair idea now as to its value. The more equity you have, the more attractive you are, again, generally. Lastly, affordability is a real factor these days. It follows that the more you are paying to your mortgage, the less you can afford to the IVA. The less you pay on the IVA, the less you can afford for any equity release. Don't forget that any product offered can be no more than 50% of the IVA payment when the time comes, so the less you can afford, the less attractive you are.

If these things then mean that the extra 12 months kick in, that seems to me to be the best result. You then finish your IVA, if you can my advice would then subsequently be to pay your IVA payment against the mortgage to bring it down somewhat, and, when your credit file has recovered or reset itself, you should then be much more attractive to lenders, not least because you will have no unsecured debt for a lender to worry about.

Hope that makes sense.

Regards.
Cert DR
23+ years in debt advice
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Coline81

Posts: 48
Joined: Tue Oct 24, 2017 12:51 pm

Post by Coline81 » Thu Nov 19, 2020 4:38 pm
Yes it does make a lot of sense thanks!
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