iva and mortgage

smelly26

hi me and hubby have a joint iva which we are just managing to pay each month but have now just been told that at the end any equity in our property will be used to clear any outstanding owing. is this true and can anything be done, we have 3 years left running at moment.

Useless_with_wonga

Hi,
Yes that's right i'm surprised you didn't know that. However it may not be that bad. As things currently stand you'd struggle to get a mortgage deal with much less than a 20% deposit so making it an 80% Loan to Value mortgage.
So for example if this were true of your circumatances say you have a 100K House and a mortgage balance of between 80K to 100K although you may have equity(Difference between house value and what you owe) you won't be able to release it by remortgage because no one will loan you over 80% loan to value. I hope i have explained that so that you see the point i'm making.
In this scenario you will be asked to pay into the IVA for another 12 Months in lieu after that the matter is done and dusted and you are debt free.
Using my previous example if your house was worth 100K and you owed less than 80K you would be expected to remortgage up to that point in this case 80% Loan to Value e.g you only owe 70K on your mortgage you would have to remortgage to 80K and give the IVA the 10K that you had released after that you would finish the IVA payments to the year 5 anniversary and then you will be debt free.
Obviously this would up your mortgage repayments for the remainder of your mortgage term to cover the 10K and you would basically have turned 10K of your original debt into a secured loan by adding it onto the mortgage.
As i say i'm surprised that you were not aware of this. Try not to worry plenty of people on here that can give you advice.
You are usually asked to release any equity in year 4 of the IVA.

mistercovert

Too be honest finding a company who would give a mortgage to a sub-prime candidate in an IVA will be very hard. Unless the IVA companies are doing special deals with inhouse finance companies.
You can just imagine heading off into your local ranch of HBOS asking for an 80% to LTV mortgage whilst you are in a IVA. The response might be quite short and abrupt. if you asked for 10% to Loan value than you might get a better response

Rob H

lexie2005

Hi there, I too am surprised you didn't know this, it was one of the main points our company made us aware of. We also had to get 2 valuations done on the property in the first year.

NoMoreTears

Hi all,
A little 'hijacking' of this thread - sorry - but ...
I have read that if during your IVA you come into a bit of money (or say a 'friend' does), then you can finish the IVA there and then with a lump sum payment.
For example, if paying 1k per month for 60 months on an IVA, total payment over five years would be 12+12+12+12+12 = 60k.
If after three years you could find 24k, you could offer this as a lump sum and the friendly loan people would take it and finish the IVA agreement straight away.
I think all that is true?
Anyway, my question is ... bearing in mind that if you let the IVA run they could revalue your house in year 4/5 and ask for some of the equity, would they allow you, say in year three, to sell the house, realise the equity that is now in it, and use this equity released amount to settle the IVA with a single lump sum payment?
Hope that makes sense!
Any help appreciated.
Martin

Useless_with_wonga

In short yes that is possible however what you can't do is sell your house without telling the IP as they have registered an interest in your property with the Land Registry (not quite sure how all that works but it's right)
You would need to discuss with your IP to see if your equity was sufficent to have the creditors accept it as a Full and Final before you did anything as rash as selling your home

NoMoreTears

Thanks UWW, what you say makes sense!