F&F how does this work?

inaniva

Hi all,

I would really appreciate your help on this.
Basically my oh and myself have a joint iva and we have 11 months to go. We pay £400 a month so £4400 left to pay.
If we did a F&F does this mean that we just offer this amount?
I was thinking of asking a family member to take a loan out for this amount and then we would pay them instead. The repayment amount is slightly less than we have to pay to our IVA but it would be great to finally be free from it and also not to have to do the remortgage/equity thing which is facing us in Jan/Feb 2011.
My oh is due to start a new job soon with a £200 net increase a month so it would nice for us to have this for ourselves esp with Christmas around the corner and a little one in the house.
If the family member would do this for us then does it sound realistic to give them that amount (£4400).
How do ppl normally do a F&F apart from a windfall?

I also spoke to my IVA company today Grant Thornton and they were discouraging about a F&F saying it would cost us more if we went the loan route but I couldn't help wondering if they were putting me off simply cause they wouldn't make money off us anymore. I never got as far as discussing a figure.

Any help would be great.
Many Thanks

Charco_2

A loan would cost more - you're repaying £4,400 flat to the IVA, you'd have to pay £4,400 plus interest to the loan... and the whole idea of the IVA to leave you debt free!

The other thing is, although you are repaying £400 monthly, even if you wished to pay this off early your IP would still have to address any equity in your property... so £4,400 is not the final figure, you need to calculate how much equity you have too, regardless!

Think of the value of your home REALISTICALLY... has a house in your street sold recently? Is there one for sale that you could look at the local estate agents for? The economic climate is in your favour here since houses are worth less and less so your equity is going to be less too!

When you think you have a value, multiply it by 0.85 because no lender will lend you more than 85% LTV (it's a lot less than this really now but that's still the standard figure being used). Then take away your outstanding mortgage!

This will give you the figure you're going to have to address from your equity as well as the £4,400! (there may be no extra but be sure to calculate it anyway!)

inaniva

Many thanks for your help.

Max_1066

Good luck with Grant Thornton. They were a nightmare when I was trying to arrange a F&F settlement. They just seemed to want it as high as possible to make it easy. I'd recommend seeking advice from other sources such as here or the CAB, etc especially as you have property. The only good thing about the current climate is that house prices have dropped so the equity has probably reduced over the last couple of years.