I am almost at the end of 5 years of my IVA. I passed the state pension age very early in the IVA. When I entered the IVA I had an interest only mortgage that expired on reaching state pension age. In discussions with my IP at the time, I was told that if the IVA ends after state pension age and after the mortgage end date, no extension of the IVA from 5 years to 6 would be required. The mortgage was with a lender who proved to be extremely tolerant, and allowed the expired mortgage to continue for some time. Eventually, they wanted to regularize the situation and we agreed a short extension to the mortgage (with the consent of the IP) without any further borrowing or formal re-mortgage - just relying on the original mortgage - the mortgage payments remained the same.
My original IP seems to have been bought out by a new IP. The new IP has written asking me to try to re-mortgage the property to introduce what they have estimated as the equity in the property, failing which, and failing to find anyone else to come up with the equity required, the IVA would be extended from 5 years to 6 years.
Re-mortgaging will simply be refused because I am in an IVA, my age, and affordability criteria. Also, my understanding of the general protocol applying to IVAs is that if new mortgage payments, when deducted from the current IVA monthly payment, take the remaining IVA oayment to below £50.00, the IVA should cease immediately. My IP has failed twice to answer my specific question about this, and merely repeated that I need to obtain 2 re-mortgage refusals, and in the event of no other source of funding the equity asked for, the 12 month extension will apply. I have pointed out that a re-mortgage from now until the end of the current mortgage term early in 2021, when the current monthly IVA payment is deducted from the new mortgage payment, the result is a very substantial negative sum (I did my calculations based on an extremely unlikley re-mortgage interest of 0%).
My questions are: (1) is the IP correct to require an extension to 6 years if the equity requested cannot be raised, even though I am past state pension age and any new mortgage payment from a re-mortgage would exceed current IVA payments by a substantial amount? (2) if there is a 12-month extension, does it relate to a period of 12 months, or an additional 12 monthly payments? (3) am I mis-interpreting the IVA protocol?
I do not know exactly what clauses you have in your agreement, but my understanding is that the remortgage payment must not exceed 50% of your current mortgage payment ( if a remortgage was, indeed, possible). A remortgage happens, if at all, in the final few months of an IVA, so your suppositions regarding an IVA payment reduced to below £50 would, in any event, be largely irrelevent.
Protocol says, in the pre 2014, versions, basically, "remortgage or extend" ... so yes, as you cannot remortgage, regardless of reasons, your IP is correct to seek an extension.
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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