Anyone forced to remortgage in their 4th yr?

needtofightback

Hi
I'm having a telephone meeting on Mon with CCCS & hopefully will be able to get further advice on whether the DMP or IVA is most appropriate for me.

I have got into a financial mess in the last yr as I couldn't manage my creditors due to going on long term sickness (still unable to work) & ultimately losing my job. Prior to this we were doing ok, my husband is self employed.

My question is, If we enter a DMP I think it will take us around 10 yrs to pay off & we'll be 65 by then. If we got an IVA, I've heard they can make you remortgage in the 4th yr. It scares me as 1) I don't really want to get a mortgage for 10 yrs (max age is to 70yrs i think) and 2) what if we can't get one, will we be forced to move out?

Please can anyone let me know what happened to them after the 4 yrs? Thanks

ld54336

When i was applying for my IVA they said if i couldn't get a re-mortgage (which is quite common they tell me) then they'd add an extra year to the IVA. You wont lose the house

Hope that helps a little x

needtofightback

Thanks ld54336, that's really helpful.

Charco_2

You will be expected to address any equity in your home somehow.

The most common ways are

1. Remortgage
2. Secured loan
3. Lump sum offer from friend or family
4. Extra year (if only a small amount of equity)

It is not common practice for people to be forced to leave their home.

The first thing you need to consider is how much equity are you likely to have? This is really what will dictate your options.
(Take the value of your home and multiply it by 0.85 and then take away your current ourstanding mortgage.)
No lender will lend you more than around 85% of the value of your home. So a house worth £100,000 with an outstanding mortgage of £75,000 is treated as worth £85,000 for the purposes of the IVA so there is only £10,000 of realisable equity (not £25,000).

As you say, lenders will be unlikely to be clambering over eachother to give you a mortgage at the age of 60 and with an IVA but as long as you can show the IP (and your creditors in the IVA) that you have genuinely tried then there is not a lot more can be done. Usually IVAs will have a clause to say that you will not be forced to sell your home.

So if a mortgage is not available and a secured loan is unlikely then perhaps a friend or family could offer a lump sum... so suppose (sticking to my simplistic example) that you did have £10k realisable equity and your best friend was willing to offer to lend you £5k then your creditors may accept this and call it quits. Alternatively you could offer to make one year's extra contributions to address the equity.

churchrat

hi charco

out of interest, can you tell me what would happen if you cannot remortgage but have a large amount of equity?
are the creditors willing to accept just another year of payment?

many thanks

Moi_63

I hope so.

We will have equity but from what I've heard we may not be able to remortgage or get a get a secured loan. We have no friends or family members with that much cash.

That only leaves us the 12 additional payments option. Why should the amount of equity available have an effect on this if you cannot release it?

needtofightback

Thanks Charco, really useful info. I think we will have a fair amount of equity so what will happen then? Couldn't get a lump sum payment from anyone. If they agreed a further 12 mths am I right in thinking that's 6 yrs in total?

On the calculation wizard it said either a DMP or IVA would be best for me, but I've yet to discuss pros & cons. I'm trying to understand IVA but don't want to spend all 5 yrs worrying about what will happen at the end!! Is it all pre-arranged at the begining? Also if you could manage to pay more off (if i ever can go back to work etc) what happens then? I'm confused as read it is a legal thing so no changes can be made but then read that about the 4th yr. Hope you can understand this warble lol.

Charco_2

churchrat wrote: »

hi charco

out of interest, can you tell me what would happen if you cannot remortgage but have a large amount of equity?
are the creditors willing to accept just another year of payment?

many thanks

Newer IVAs will have this covered to say that you will not be forced to sell your home, older IVAs won't have covered this but the accepted standard is still usually the same.

You WILL have to show your IP that have made every genuine effort to realise the equity though... usually TWO rejected mortgage applications.

(Out of interest, for your Info... recent market trends show that mortgages available for people in IVAs require 50% Loan to VAlue ration and 9% interest rates - now who the heck is going to fit into that category? Bear in mind, any remortgage cannot increase your mortgage repayments by more than 50% of your disposable income! Which is good news for you! And Moi_63 and others on IVAs)

Then, once the IP is satisifed that you cannot realise your equity, you will generally just be expected to extend your IVA by a year in consideration of the potential equity (not)available!


NEEDTOFIGHTBACK:
Yes everything is arranged at the start but figures can change. House prices move up and down for example, BoE Baserates move too which will affect how much you repay every month and ultimately how much equity is available in the end. It will also affect the remortgage availble to you in four years time.

So yes, an IVA is a legal document and therefore more rigid than an informal solution, it is not completely unflexible.

Circumstances change too. You might go back to work which will obviously affect your income (AND expenditure). Your IP can then recalculate your I&E
to reflect your home situation. If you can afford more then you should pay more... similarly if for some reason your income is adversely affected you can speak to your IP about reducing your monthly contributions.

kns_2

My IVA just says to release any equity if there is any,Nothing about paying for an extra year if there is no equity.
So surley it will finish after 60 months not 72:(

So if they say I have to pay for another 12 months will I be in my rights to say no as this is not in my paperwork.

Charco_2

You'll only be expected to address any equity you DO have.

No equity, nothing to address, no extra year

mia1830

Charco wrote: »

You will be expected to address any equity in your home somehow.

The most common ways are

1. Remortgage
2. Secured loan
3. Lump sum offer from friend or family
4. Extra year (if only a small amount of equity)

It is not common practice for people to be forced to leave their home.

The first thing you need to consider is how much equity are you likely to have? This is really what will dictate your options.
(Take the value of your home and multiply it by 0.85 and then take away your current ourstanding mortgage.)
No lender will lend you more than around 85% of the value of your home. So a house worth £100,000 with an outstanding mortgage of £75,000 is treated as worth £85,000 for the purposes of the IVA so there is only £10,000 of realisable equity (not £25,000).

As you say, lenders will be unlikely to be clambering over eachother to give you a mortgage at the age of 60 and with an IVA but as long as you can show the IP (and your creditors in the IVA) that you have genuinely tried then there is not a lot more can be done. Usually IVAs will have a clause to say that you will not be forced to sell your home.

So if a mortgage is not available and a secured loan is unlikely then perhaps a friend or family could offer a lump sum... so suppose (sticking to my simplistic example) that you did have £10k realisable equity and your best friend was willing to offer to lend you £5k then your creditors may accept this and call it quits. Alternatively you could offer to make one year's extra contributions to address the equity.

hi, im looking into an iva and just came across this, im in a co-ownership mortgage. i have been able to only ever borrow more money on my mortgage for home improvements, will i be expected to still try and remortgage? i know co-ownership most likely won't let me! it's 50/50 shared. thank you, just seems you know what you are talking about:)