iva accepted in dec 2009 advice please

i_believe_in_angels

Hi i have been following you all for about a year now,its such a relief to read about other people in the same situation as myself.
I have had my iva agreed in dec o9:jmy debt was £41,000 i had the famous lightbulb moment,trying to cash out on credit card to put in the bank,so my direct debits wouldn't be returned!!!
Anyway back to advice bit-my house is prob worth £180,000 with an intrest only mortgage of £150,000,in the terms of the iva it states i need to try remortgage in year4 ??
1 who would give me remortgage based on credit history?
2 my mortgage is self cert and is in joint names with my partner
3 what happens or how likely is it that i would be able to remortgage?
my current mortgage payments are £767 per month and my iva is £250.00

any help would be appreciated thankyou x:A

Charco_2

I don't know who your IVA is with or if your IVA states an actual figure you must release - but the way it SHOULD work is like this.

(The value of your house will change over the course of your IVA but lets assume it doesn't)

- Your house is worth £180,000
- In the final year of your IVA, you will be expected to release as much equity as you can... a fairly standard term in the IVA agreement would be that you will NOT BE EXPECTED TO SELL (although sometimes your creditors will ask for this term to be removed at your creditors meeting).. so you'll only be expected to remortgage!
- Realistically speaking, no mortgage company is going to lend you more than 85% the value of your home so your REALISABLE equity is actually only around £3k (85% of £180,000 is £153,000, minus your current mortgage = £3,000 )
- In your final year, you'll have to show that you have at least made an effort to release the equity in your property... most likely you'll not succeed in a remortgage.

Choo_Choo_4

I believe in Angels - the way things should go would be that a 4th year valuation would be carried out on your property to determine value there and then ... so we know that it's currently worth £180k ... in/around the 4th anniversary of the IVA another valuation would done to see if this has increased/decreased ...

So, for arguments sake - let's say the valuation doesn't change and it comes back in again @ £180k then you will only be able to remortgage up to 85% LTV which as Charco has already pointed out comes in @ £153k which shows £3k equity over mortgage balance as this won't change due to Interest Only.

It now seems to be common practise in IVAs that people who are required to realise less than £5k equity from property would instead continue their monthly contribution for a 6th year (instead of remortgaging)

I think this would make much more sense for you IBIA given that you could only be looking @ £3k equity - a remortage would be silly as you'd be going onto a sub-prime mortgage and it would end up costing you far more in the long run (presumably you'd be tied into it for 2-5 years ...)

Who knows what will happen over the next 4 years but at least you know that you WILL NOT HAVE TO SELL YOUR HOME, and you would not be expected to remortgage for such a small amount of equity. Even if the value comes back @ £183k then that would show £5.5k equity and extra payments would still be an option.

You never know - you might find yourself in a position in Year 4 where someone (family member for example) might want to offer you the £3k up front to finish
IVA early - who knows?

You might win the lottery (here's hoping eh?!)

Just concentrate on making your £250 cont. each month and cross this bridge when you come to it, or nearer the time. Don't worry about things that won't come into action for another few years

i_believe_in_angels

charco and choo choo thanks very much for the advise :A

skintflint103

It is very unlikely as the others have said that you will get a reasonable rate re-mortgage. However mortgage markets and property prices will change considerably(for better or worse) in the next 3 years. However what the others have not considered is that in the remortgage quoted you will encounter fees too. Especialy if you use a broker,and as you are sub prime in an iva you will need to. Realisticaly your IVA co will increase the term of you IVA by one year . As I say to all READ it all. The other thing not discovered is are there 2 people in the iva (they're not really joint you may have 2 treated as one.) If so and the other person is NOT involved half of any equity is their's a thing that IVA companies always fail to point out. They also think that it's a great idea to use the other person's income too in order to get to their £200 disposable income threshold where they can make enough money.They can refuse and should refuse to sign the permission for a restriction. In your case an IVA is probably best advice IF you are the sole owner and only you is in debt. I bit different other wise .

Charco_2

A little knowledge is a dangerous thing - and you have very little!

skintflint103

So point out the part you think is not right then

skintflint103

Boo Hoo he's forgotten to answer! (probably arranging a nice IVA)

Charco_2

"If so and the other person is NOT involved half of any equity is their's a thing that IVA companies always fail to point out. They also think that it's a great idea to use the other person's income too in order to get to their £200 disposable income threshold where they can make enough money."

There are two things here obviously, equity share is one and income share is the other.

1. One of the first things an IP will consider is equity share.
A) In lots of cases it can actually be a deciding factor in whether or not the debtor is insolvent.
For example:
- You have £40k of debt and equity worth £45k - YOU ARE DEFINITELY NOT INSOLVENT AND CANNOT HAVE AN IVA! OR
- You have £40k of debt and equity worth £45k split with your wife!
Depending on your surplus income you could still be insolvent because the £22,500 of yours does not out-strip your debts!

If two people own a property with a joint mortgage and one decides to enter an IVA they must inform their partner - and in almost all cases I know of, the IP/IVA Company will write to the other interested parties advising them to get independent legal advice!

If the other partner was not informed, they would actually have to right to sue to Insolvency Practice because to release the equity they are going to have to re-mortgage which will cost the other partner money in increased mortgage repayments plus they'll need to protect their share of the equity if the partnership/marriage was to break down at a later date!

So (to put it in your language) equity share is a thing that IVA Companies could never fail to point out!

2. I'll come back to income share soon i hope!

skintflint103

If you have in your example 40k of debt (assumed unsecured) and you have insufficient income to service the debt I would say that you are indeed insolvent unless you want to sell the property to repay creditors. This I admit is a first class example of IVA wins. If you have sufficient income to pay an IVA you will get one. This is a matter of do you wish to keep or dispose of your assetts.? Lets not forget that if your partner does not want to sign a mortgage application they do not have to if they are not indebted. therefore they should not sign a restriction over their property passing an interest to another party. That would commit them to a future remortgage for a debt that is not theirs.
I really could'nt care less about your personal insults and snipes at me, I'm solvent. The people reading are not or would not be wasting time here. The point is it should make them take another look before commiting to a 5/6 year bankruptcy. You hate that phrase don't you?. I have to praise your knowledge of IVA practice though, first hand experience is priceless. It's a pity you forgot to mention all the 'Devil in the Detail' earlier. Wolves? little red ridinghood springs to mind here.

Choo_Choo_4

skintflint103 wrote: »

Lets not forget that if your partner does not want to sign a mortgage application they do not have to if they are not indebted. therefore they should not sign a restriction over their property passing an interest to another party. That would commit them to a future remortgage for a debt that is not theirs.

Hence the reason why an IP would recommend that the other party (not in the IVA) should seek independent legal advice - they wouldn't need this if it was a Joint IVA.

Some people want to keep their debt problems from their other halves BUT unfortunately this cannot be done (that is not to say that there are unethical companies out there who might chance their arm .. ) but again any IP who values their licence wouldn't consider proposing an IVA without confirmation that BOTH parties are happy to proceed.

Skintflint - I think it would be best to try answer the genuine queries on here instead of trying to score points. I've read some of your scenarios relating to the BIG BAD IVA and quite frankly some of them are sick.

There is plenty of good advice on here - there are plenty of posters with 1st hand knowledge of bad experience in IVAs (because of circumstances, bad advice or other) and hopefully newbies will be able to learn from their experiences.

I Believe In Angels - hope you got the answers you needed before this thread turned into a bit of a nonsense x