IVA's and Mortgages

mrsmessy_2

I'm hoping someone can give me some advice. My husband and I are seriously considering going into an IVA however I have concerns over the impact this will have on our mortgage.

I had heard before that when entering into an IVA it is usual practice to switch to an interest only mortgage - is this actually the case? I really do not want to do this as I am concerned about the damage 5 years of interest only will have on the monthly repayment when we return to a repayment mortgage at the end of the IVA. We previously considered going interest only but the saving each month was not that significant for the overall cost to us long term.

I'm also worried about the issue of equity in your home and an IVA. If anything we break about even as regards to equity so I know there is no money there to be had now. I have read various things though about it being included in your IVA agreement to look to release any equity at the end / 4th year of your IVA - is this the case, and if so is there a set equity amount that you must have before they will ask you to explore this route?

Finally, my husband and I are in the middle of a 5 year fixed term mortgage which would obviously come to an end during an IVA if we were to commence one now. How do we stand getting a new mortgage deal from our current provider (Nationwide) if we are in an IVA - will they even consider us for a new product? I'm worried we will be stuck on the banks base rate and have the risk of a variable rate on a tight IVA budget.

Any help or advice is much appreciated.

jlee1

Did you get any advice about whether you could get another deal with current mortgage provider? As mine runs out at rhe end of the year and i'm only 5 months into IVA?

Charco_2

If Northern Rock are a significant creditor to you (ie, do they own 25% of your debt) then yes switching to Interest Only during your IVA is likely... if NR aren't then it's less likely!

You will only be expected to release the equity you actually have in your property - it wont be just some made up figure.
"Hey look, they have a house/mortgage!"
"Great, put an extra £10,000 on their IVA!"

Your IP will require house valuations and your mortgage statement. Since you will not be required to sell your home, your IP will will only be interested in the amount you could reasonably release by remortgaging or obtaining secured loan - no lender will lend you more than 85% of the value of you home so that is all your IP will be looking at.
If the amount you could be expected to release is around £5k or less (or an amount you could manage to pay down with one extra year's contributions) then your IVA will be extended for a year rather than you having to remortgage - which is obviously a lot better for your pocket but might try your patience!

As regards your last question, i dont suppose anyone could really know. The market is changing so much. I would guess that it is unlikely that Nationwide would be keen to offer a new mortgage, they're quite fussy like that, but you would certainly be able to find a product with another lender - albeit that the interest rate will be affected. However, the new rate would be recalculated into your IVA and you wouldn't be expected to struggle through in your IVA.

ARE you BOTH considering entering into IVAs?
Do you BOTH have significant debts?
Do you have joint Debts?

malkkky

Charco wrote: »

As regards your last question, i dont suppose anyone could really know. The market is changing so much. I would guess that it is unlikely that Nationwide would be keen to offer a new mortgage, they're quite fussy like that, but you would certainly be able to find a product with another lender - albeit that the interest rate will be affected. However, the new rate would be recalculated into your IVA and you wouldn't be expected to struggle through in your IVA.

I think the question referred to a fixed rate deal ending rather than obtaining a new mortgage. My experience with the Derbyshire (now owned by Nationwide) is that they were fine to offer a new deal (assuming you are up to date with repayments) but they have just told me that they would not consider a further advance until 3 years after IVA is completed.