Remortgage Clause

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paul362
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by paul362 » Fri Oct 12, 2018 3:32 pm
Remortgage Clause - I have probably 200k of equity in my house today. I'm in month 54 of a 72 month IVA plan with the remortgage clause set to kick in around month 66.

Pay £465 a month into the plan and around 9.5k remaining if left to run the 72 months.

Current mortgage is around £1500 a month interest only!

In this situation then what is the chance that the remortgage clause would be satisfied in month 66. If equity stays around the same 200-220k mark. I have the 50% clause in the contract as well.

I'm 40 and really want to get onto a repayment mortgage ASAP. Combined household income around 120k. When I'm asked to remortgage then would I have to go for another interest only or could I chose a repayment?

If family offered around 6-7k now for full and final settlement do you think this could be accepted?

Just need to plan ahead really!
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Foggy
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by Foggy » Fri Oct 12, 2018 3:46 pm
When the equity clause is considered it will be triggered, so you will have to attempt to remortgage. Hopefully this will fail and you will then have to extend for 12 months. If you manage to get accepted for a remortgage it will be at higher rates than you would like ... whether you get an interest only or repayment will be down to what the lender offers and agrees to.

You have 18 months to run plus 12 in lieu of equity (in a F&F it is usual to assume the 12 months will lick in, unless it can be demonstrated otherwise). So ....30 months at £465. The creditors are looking at getting (assuming remortgage attempts fail) £13950 more from you. Considering the potential equity in the property I am guessing that they might prefer to see how that pans out rather than accept an offer much below £12 - 13k ...however I could be wrong!

With that sort of equity you might want to look at secured lending to offer a F&F along with partial equity release --- I believe Shaun has access to such a product. Might be worth a quick chat. His details are here: memberlist.php?mode=viewprofile&u=22837
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paul362
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by paul362 » Sat Oct 13, 2018 11:01 am
Thanks for the prompt response. V helpful.

Would you know if the terms of any remortgage length and type (if we were to get approved) are up to us or does the IVA dictate the terms? Due the amount of equity and income (we pull in V healthy salary with job security) there is a chance lenders would be interested in taking us on here...Could the IVA make us sign up to a new mortgage at silly rates that we don't want... just so they get what they want?

As it stands today I have about 13 years left on the current mortgage which is interest only. I obviously need to take this up to retirement at some point soon and that's always been the plan; but at the same time I want to protect our best interests. Can the IVA also make us try and remortgage to max retirement age (68) and keep it at interest only so mortgage payments are lower so its then within the clause boundaries? or does it have to be the same length as the remaining term of the current mortgage?

Can we call the shots here and show that we have attempted to free equity on a remortgage with a repayment type and keep it for the same length? Obviously this would then take us well over the 50% threshold and thus we'd be protected from an equity standpoint, then activating the additional 12 months where we could then just offer a healthy F&F offer to finish this blooming thing!

I guess I just don't want to hand over 30 odd grand and would rather just pay them the 465x12.

I'll also speak to helplines to get some advice on this as well.

Thanks!
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Foggy
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by Foggy » Sat Oct 13, 2018 11:20 am
You are not really in the driving seat here ... if you get a remortgage offer, assuming it is within the terms and ceilings agreed in your release clauses, you have to take it, along with silly rates, unless you can find a better offer elsewhere.

The term can be extended, if your lender agrees, up to retirement age to offset the limitations imposed by the need to keep the increase in repayment down to 50% of the IVA payment.

Some IP's will get a broker to look for you, others will accept your own endeavours, making it simpler for you to go get and present to them a couple of refusals.
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