Does IVA affect your potential to change mortgage?

Dibdob

Does anyone know whether you can still apply to change your mortgage if you have an IVA? Its all new to me so be gentle, sorry if I seem thick!
Our current mortgage holds a 3 year 'lock in' which finishes in June, and we are hoping to change our mortgage to a better rate .
Unfortunately as my husband is self employed, we could only get this mortgage as first time buyers, to get onto the property ladder (and is the worst mortgage going as it is an interest only one, which is now at 9% and due to rise again after the recent interest increase!).
So, we only have 6 more months to go and holding in there,and have managed to pay our mortgage for 2 1/2 years so far with no missed payments.
We are sorting our out finances after having first lightbulb moment 3 weeks ago and due to have an interview with CCS next week, to see if they can help us with outstanding debts.
I was just wondering IF we had to go down the IVA road, would it affect our chances of changing our mortgage next year? We may not have to, but just trying to find out information in advance so we can see all options.
Any advice would be appreciated! Thanks!

toonfish

with an IVA you will be struggling, although you should still get much better than 9%. Go and see a fees free broker.

jamesd

No missed mortgage payments is good, not having an IVA is good. If you're also managing to keep up with your other debts, even at minimal amounts or repayment, and can do so until June, it may be worthwhile to do no more than shift debt around to lower interest rates until June, get the remortgage to a lifetime tracker, then go with the IVA.

The problem with an IVA is that it will limit you and you need to find out how much before you do it.

It's also worth remembering that you can get a mortgage offer that is valid for six months, so discuss this with your broker and you could end up doing the remortgage deal in a couple of months, with completion in June, then moving ahead on an IVA with the mortgage deal sealed, if you need to.

Lifetime tracker mortgages are good for this situation because you don't need to remortgage on any fixed schedule or face a switch to comparatively high SVR rates. Instead you can wait until your credit picture clears up again before doing it.

When you do get mortgage deals to consider, run them by the people here so you can get some feedback on whether they are a decent deal. Also worth looking at how the BM Solutions mortgage criteria work to see how one lender decides what sub-prime deal someone qualifies for. Note that you may well be able to get a prime rate deal, so don't assume you need sub-prime; this is only so you know how the sub-prime bit can work.

Make sure you discuss all of this with CCS so they know that they need to manage your mortgage options as well as just the debt repayment and you know that they have carefully considered and clearly discussed the mortgage implications with you.

Conrad

jamesd wrote:

It's also worth remembering that you can get a mortgage offer that is valid for six months, so discuss this with your broker and you could end up doing the remortgage deal in a couple of months, with completion in June, then moving ahead on an IVA with the mortgage deal sealed, if you need to.

.bmsolutions..

No, this isnt correct.
When you sign an application you are under an obligation to disclose any changes to your circumstances prioer to legal completion. Lenders often re - check a clients credit just prior to completion, especially when a long time frame has elapsed.

BM Solutions are a lender I never use, mainly because thier fees are far too high.

Yes an IVA will have a considerable adverse effect on rates available.

The above poster suggests a tracker rate. Im my long experience the most appropriate course for vulnerable borrowers with a lot of debt is a fixed rate, with no tie - in once the fixed rate ends. The last thing someone on a tight budget needs is fluctuating payments.

Fixed rates are competetive. Make sure the broker you deal with uses all lenders including the Building Socieities such as Coventry, Derbyshire and Scarborough in order to benefit from best deals.

Many brokers are lazy and give the impression they are indepeandat so be careful. Intelligent people buy based on facts alone. Whther or not someone 'seems a nice fella' is totaly irrelevant. I used to be a slaes manager, and I found the more honest brokers were worse sales people and had worse inter personal skills.

Lastly I would mention that I charge fees. I know fee free brokers but they do not dedicate the time and energy I do into finding the best deal - they cant afford to commit to lots of work on the basis they MIGHT earn a commision only if you go ahead. How much work would you do for free??
Wouldnt you do a much better job knowing you had a serious client willing to put money on the table up - front?

AndrewSmith

Conrad wrote:

Lastly I would mention that I charge fees. I know fee free brokers but they do not dedicate the time and energy I do into finding the best deal - they cant afford to commit to lots of work on the basis they MIGHT earn a commision only if you go ahead. How much work would you do for free??
Wouldnt you do a much better job knowing you had a serious client willing to put money on the table up - front?

Very sweeping statement that is incorrect. You cannot generalise about fees free brokers in this way.

I do not charge fees to the client, have a very healthy profitable business, conclude business with approx 80% of people with whom I have initial contact and ahve 13 years of unblemished financial serivces history.

I see fees free as a way of ensuring that the owness is on the broker to find the client a product thata) they will be happy with, b) is the most suuitable and c) is something that the client will want to complete on.

Brokers who charge up-front are more likely to be lazy as they have already received a proportion of their monies thus have less incentive to proceed quickly.

Conrad

I dont sell life cover as I am 100% focused on mortgages. Any serious person wanting my time has to pay for it.
Sometimes it can take me a whole day to place a case. Surely no one can afford to give a day of thier time for free?

Many clients come to me after having wasted weeks with a fees free, life commision supported broker having been told thier case is hopeless.
Those brokers that have failed the client ALL BELEIVE THEY ARE EXPERTS, but I beleive only the fee based model can enable one to develop the required level of expertise.

Case placing takes up most of my time, it is the key duty of an advisor to ensure the deal fits the client like a glove. I really cant understand how some brokers can give this dedicated time away for free IN THE HOPE THE CLIENT WILL DO BUSINESS.

I was a regional sales manager for many years. The highest conversion rates (ie clients seen to clients signed up) 1 in 3. Some advisers had it in thier heads they converted 1 in 2, but any detailed analysis revealed a different picture ALWAYS.

So if Im converting 1 in 3 and not diluting my time and knowledge gathering with life policy advising, I can only justify spending so much time on case research by charging fees.

AndrewSmith

Conrad wrote:

I dont sell life cover as I am 100% focused on mortgages. Any serious person wanting my time has to pay for it.
Sometimes it can take me a whole day to place a case. Surely no one can afford to give a day of thier time for free?

But it is not for free. If the job is done correctly in the first place then the commission will follow.

Many clients come to me after having wasted weeks with a fees free, life commision supported broker having been told thier case is hopeless.
Those brokers that have failed the client ALL BELEIVE THEY ARE EXPERTS, but I beleive only the fee based model can enable one to develop the required level of expertise.

I agree that there are some who are very inexperienced but hide under the umbrella of larger corperate companies who are focussed on th ancillary sales to earn extra revenue. As an ex sales manager and sales director of a corperate company I fully understand this, and the average conversion rates of general business.

However you cannot say that just because you are fee based you are going to give better quality of advice or customer service than a broker who decides to work on a commission only basis.

I have to also disagree that I, whilst not relying on the life commission to remain viable, will look at the protection issues of the client under the auspices of giving 'best advice' to the client. I will recommend strategies to cover any shortfalls that are identified as appropriate. If the client decides to implement them then fine, but they are never under pressure to do so.

What this does mean though is that, as demonstrated in my last recent compliance audit, Ii am not exposed in any way the the possbility of complaint from the client for not advising them that certain situations or circumstances can be protected against. As a professional adviser I see it as my role to advise the client on the mortgage and any surrounding issues relating to it.

Case placing takes up most of my time, it is the key duty of an advisor to ensure the deal fits the client like a glove. I really cant understand how some brokers can give this dedicated time away for free IN THE HOPE THE CLIENT WILL DO BUSINESS.

I don't generally have an issue with client retention. The vast majority of prospective clients are more than happy with what is offered by way of service and, as such, never feel like I am giving my time for free.

I was a regional sales manager for many years. The highest conversion rates (ie clients seen to clients signed up) 1 in 3. Some advisers had it in thier heads they converted 1 in 2, but any detailed analysis revealed a different picture ALWAYS.

So if Im converting 1 in 3 and not diluting my time and knowledge gathering with life policy advising, I can only justify spending so much time on case research by charging fees.

The business model I use and the way I conduct business enables me to conclude business on average with approx 80% of those I fact find. whether anyone agrees/disagrees with it personally I don't care. I know it is a fact. Maybe it is because I am selective about the cases I take on. After all i do regularly turn business away as I am kept very busy.

Maybe it is because of my conversion rates that i do not have to charge a fee and can conduct business on a fees free basis whilst still giving the client the best possible advice on their mortgage and the surrounding areas.

Fees free or fee charging. There is no right or wrong and neither guarantees better or worse client service or quality of advice. It depends on the particular business model of the adviser firm and their need to over costs etc.

AndrewSmith

Back to the original thread subject,

Conrad I agree with your statement regarding the laziness of som brokers in opting for non-status lenders from the outset, and that all options should be considered before using such companies.

Any other discussion relating to fees free, etc should be continued on a separate thread s it will prove countr productive to the original poster.

Dibdob

Sorry guys! Didn't mean to start an arguement!!!

AndrewSmith

Dibdob wrote:

Sorry guys! Didn't mean to start an arguement!!!

You didn't lol

Conrad

Andrew

Its hard to draw conclusions. All I will say is I take on the most difficult cases, often those which have been advised have no chance of suceeding.
I used to arrange protection but what with the required training, updates, compliance, comparing policies, RWL etc etc I found about 30% of my time and energy was being diverted away from the core reason people copme to see me - mortgages.

Now with 30% time freed - up, I can see more lender reps' (many brokers dont have time to see every leders rep, I do) and spend more time focusing on mortgages.

In terms of best advice I simply advise clients verbally and in writing that they ought to see an IFA with reagrds to protection. Indeed many clients say they prefer to keep the 2 'big subjects' totaly separate so they can dedicate a whole block of time and energy into each.