Hi melanie,, the points you raise are very real & what you say about IVA protocol changing seems fair,, but I dont feel that these things will change,(I hope I am wrong !), I will be most surprised if banks/CC companies will allow such drastic changes & BR resulting in home loss will be the only way out for some people.
BTW,, nearly a year already,, hope you & the team are well.
I think the idea seems fine but could easily be abused. There are people on high mortgages with ridiculously low mortgage rates. They could enter an IVA at a couple of hundred a month and the slightest increase would wipe out their surplus. Creditors would then be expected to accept what had been paid to date which may be a return in the pennies or less.
Perhaps there should be a limit on the size of mortgage that would be covered as I have seen cases with mortgage payments of £400 per month on a balance of half a million. There is also the situation with HMRC who do not accept the protocol IVAs if they have a sufficient vote. It may be time to see if they will support some form of protocol IVA as currently there is a two tier system.
its not all doom and gloom, my fixed rate deal ended in june, and to my amazement my mortgage company offered me a new fixed rate, no cheaper rate but at least fixed at the current level for 2 years. So there is hope with some existing lenders.
Well no hope with my lender!! I'm not in an IVA yet and our credit is fine as we have be shuffling debt and haven't missed any payments YET. We have a mortgage of 243,000 which is currently on a discounted tracker rate paying interest only.We are only paying £390 per month on this mortgage at present. Unfortunately, in Nov our deal is finished and we go on a non discounted tracker rate.Every little interest rate increase is going to mean huge increase in mortgage payment for us. As credit is still good, I rang up our mortgage company Alliance and Leceister (Santander now) last week to guage what further deal they would offer us when our deal ends in Nov hoping that I could lock into a fixed rate and I was told that as we are in negative equity they could not offer us any further deals.
Last edited by Nicola.sa on Thu Jul 22, 2010 8:58 pm, edited 1 time in total.
I think that all of us who work in this profession are nervous for our clients who are currently on interest only mortgages, and the fact is rising interest rates are going to happen at some stage over the next two years.
If lenders refuse to co-operate with over-extended debtors, the government will have to step in with some form of rescue measure, or else we will have a housing crisis in this country. The big problem is far too many people have sub-prime mortgages which are only affordable due to the unrealistically low base rate we are temporarily enjoying.
Skippy - if lenders do not agree to option 1, then we should move straight to options 2, 3 & 4.