Is there a limit on the amount they can make us remortgage for?

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kathryn965
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by kathryn965 » Tue Jul 11, 2017 4:44 pm
Hi all, I'm new to this forum so please bear with me!
My husband and I entered into an iva with DFD in December 2011, making our 1st payment in February 2011. Due to some missed payments in 2013 due to my husband being seriously ill, we have been told our final payment will be in December this year, 2017. Monthly payment is £574. It's been a long hard slog and we were looking forward to finally being debt free. We have just received a letter from DFD telling us that The Select Partnership will be contacting us about releasing equity in our property to pay into the Iva. Here's my problem - we only have 3 years left on our mortgage and we have quite a lot of equity. All good for us. However, I've been told that we would have to increase the term, which could mean that we potentially can borrow a large amount of money to pay into the Iva. It could mean we pay back all that we owe, and have a higher mortgage over a much longer term than we currently have. The Iva was "sold" to us on the basis that you can write off "up to 85% of your debt". At this rate, we will have paid it all back, so what has been the point of us struggling for the last 6 years? Can they make us increase the term? Is there a limit on the amount they can make us remortgage for? Will we even get a remortgage at a decent rate?
Sorry for the long post and lots of questions but I am beginning to ask myself what it's all been for. My husband is 55 and to expect us to increase our term from the current 3 years to whatever term seems extremely unfair!!
Thanks in advance for any help and advice.
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Foggy
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by Foggy » Tue Jul 11, 2017 5:03 pm
There are limits which are detailed in your proposal. Additionally you will not be required to pay more than the full original debt, plus fees and possible statutory interest. so would only need to release the amount of equity to take you to that figure. Select will not seek to exceed these limits and, to my knowledge, will refuse any application which will try to do so. The alternative to equity release, should this prove impossible, would be a 12 month extension to the term.

As to the point .... well ... circumstances vary with each of us, but in my case, even had I paid the debt in full with fees and statutory interest, it would have been a lot less expensive in the IVA than out of it. Plus I was not hounded to repay the overburdening debt during the term, nor made bankrupt.
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kathryn965
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by kathryn965 » Tue Jul 11, 2017 5:22 pm
Thanks Foggy, that's helpful. And I take your point about it being a less expensive option by being in the Iva rather than out of it. I just was looking forward to being debt free from December to then realise that it won't be quite like that!
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Foggy
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by Foggy » Tue Jul 11, 2017 5:45 pm
kathryn965 wrote:
Thanks Foggy, that's helpful. And I take your point about it being a less expensive option by being in the Iva rather than out of it. I just was looking forward to being debt free from December to then realise that it won't be quite like that!



A disappointment I understand ... but, hang in there, you WILL get to the end. But do dig out your paperwork to fully understand the options and limitations. Also be aware that a secured loan is not the same beast as a remortgage so they cannot force that on you unless, at some point, you have agreed to a variation accepting 2014 Protocol terms (which do allow secured loans to be imposed).
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Ryan
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by Ryan » Wed Jul 12, 2017 12:08 pm
Hi Kathryn,

Foggy has pretty much summed things up. People normally don't want to look at the re-mortgage route as you wouldn't be looking at High Street rates whilst still in the IVA so for most people changing their whole Mortgage would probably mean transferring to a higher rate than they are currently paying. Some are happy to go down the secured loan option and then come to us once the IVA has completed and re-mortgage (including the secured loan) to a High Street Lender.

Regards
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Michael Peoples
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by Michael Peoples » Thu Jul 13, 2017 8:17 am
The secured loan may be a better option than a remortgage. The IVA protocol is not clear and if you remortgage you could be expected to extend the term and there are companies now willing to lend. Engage with Select and see what your options are as you may not qualify anyway and an extension to the IVA would apply.
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