Does IVA affect your potential to change mortgage?

AndrewSmith

Conrad wrote:

Im no genius, I just recognise its better not to be a Jack Of all Trades relying on commision.

EVEN THE FSA HAVE LONG HELD THE VIEW THAT COMMISION IS THE LEAST IDEAL METHOD OF REMUNERATION.

It is not being a jack of all trades, merely offering a full rounded advice service. The FSA would prefer that a broker offers advice on protection issues as well as the mortgage if they are marketing themselves as offering a 'full advice' service.

The case you quote above, a 20 year interest only discretionary purchase from a spouse. Not uncommon.

However, did you not see it pertinent to discuss the possibility of protection issues bearing in mind that the applicant is 62 years old with a non-decreasing mortgage balance? I personally think it is shameful if you did not discuss all the surrounding issues such as meeting repayments on death etc.
Not what I or any decent adviser would call 'quality' advice. Epecially if the client had to pay for it as well!!

Dicussing protection issues does not necessarily include trying to sell insurance products. As part of the basic mortgage fact find I always enquire about current cover, benefits being received or that would be received, employer benefits etc etc. It is part of the fact finding process and is essential under 'knowing your client'. How on earth can you supposedly give correct and appropriate advice without ever mentioning protection issues or dicussing existing policies etc?

Not something I would openly put my hand up to, especially as the FSA are known to regularly trawl this and other financial website forums.

Your point regarding the FSA is interesting, as they also get it wrong on occasion. This is the same FSA that we are talking about who allow a broker to call themselves 'whole of market' with access to only 20 lenders.

jamesd

Conrad,

Why do you think that Dibdob is a homosexual male? You don't seem to be giving sufficient weight to the specifics of Dibdob's situation.

Dibdob and husband don't seem particularly rate sensitive so long as the rate is a good one. That 9% current rate suggests a previous rate around 7% and that's 2% of interest rate rise - not a likely situation. Another forced remortgage a few years in the future looks like a bad idea and just leaves Dibdob and husband exposed to a possible adverse remortgage trap. Not worth it in this case, I think.

Fixed rates are generally a good idea but not with the demonstrated interest rate tolerance here. Ensuring a continuing competitive rate seems more useful.

It is worth waiting to see the outcome of the CCS visit. And of course we don't know about the extent of any existing negative credit entries.

One cultural/rule item here: brokers are supposed to use a signature indicating their status, but not containing more in the way of advertising than you see in the examples in this discussion. The lack of such a signature in my posts is deliberate: I'm not in the business.

Conrad

AndrewSmith wrote:

It is not being a jack of all trades, merely offering a full rounded advice service. The FSA would prefer that a broker offers advice on protection issues as well as the mortgage if they are marketing themselves as offering a 'full advice' service.

The case you quote above, a 20 year interest only discretionary purchase from a spouse. Not uncommon.

However, did you not see it pertinent to discuss the possibility of protection issues bearing in mind that the applicant is 62 years old with a non-decreasing mortgage balance? I personally think it is shameful if you did not discuss all the surrounding issues such as meeting repayments on death etc.
Not what I or any decent adviser would call 'quality' advice. Epecially if the client had to pay for it as well!!

Andrew, if we follow your logic then we could say its suitable to see a GP about a heart condition and not bother with a cardio vascular specialist!

Of course protection is important AND THATS WHY THEY SHOULD CONSULT A PROTECTION SPECIALIST. My clients are given a list of 6 local IFA's.

I used to arrange protection, but I recognised that this was diluting my knowledge and experience. People come to brokers for a mortgage.

I actually think the protection side should be kept totaly separate. Clients must be treated fairly and it is unfair to expect clients to deal with and absorb all the mortgage terms AND on top all the life policy exclusions etc.
This is not treating customers fairly, especially vulnerable clients with limited academic ability.
No wonder PHI and Mortgage payment insurance and critical illness cover often fails to pays out.

Protection applications are incredibly delicate and misunderstandings lead to failed claims. One of many examples is the fact life policy questions one minute ask 'have you ever had any illness.' to 'in the last 5 years have you had......' - no wonder clients make mistakes, which is why they should leave the protection side for a time when thier mind is free from other clutter.

Jack of all trades add less value to the food chain.

AndrewSmith

Conrad wrote:

Andrew, if we follow your logic then we could say its suitable to see a GP about a heart condition and not bother with a cardio vascular specialist!

Of course protection is important AND THATS WHY THEY SHOULD CONSULT A PROTECTION SPECIALIST. My clients are given a list of 6 local IFA's.

Jack of all trades add less value to the food chain.

:rotfl: :rotfl: :rotfl: :rotfl:

ReportInvestor

This is a clearly an important discussion for mortgage advisors, but I feel that the OP's question is even more important.

How badly an IVA will affect your mortgage options is surely one of THE key issues affecting whether you should go for an IVA or struggle on paying off debt.

We / MSE need a more precise answer to be able to help people who are considering the IVA option.

Conrad

jamesd wrote:

Conrad,

Why do you think that Dibdob is a homosexual male? You don't seem to be giving sufficient weight to the specifics of Dibdob's situation.

Dibdob and husband don't seem particularly rate sensitive so long as the rate is a good one. That 9% current rate suggests a previous rate around 7% and that's 2% of interest rate rise - not a likely situation. Another forced remortgage a few years in the future looks like a bad idea and just leaves Dibdob and husband exposed to a possible adverse remortgage trap. Not worth it in this case, I think.

Fixed rates are generally a good idea but not with the demonstrated interest rate tolerance here. Ensuring a continuing competitive rate seems more useful.

It is worth waiting to see the outcome of the CCS visit. And of course we don't know about the extent of any existing negative credit entries.

One cultural/rule item here: brokers are supposed to use a signature indicating their status, but not containing more in the way of advertising than you see in the examples in this discussion. The lack of such a signature in my posts is deliberate: I'm not in the business.

James

In my long experience a fixed rate tends to be a better bet, but one would need all factors to be sure. Fluctuating payments tend not to suit people who have experienced past payment issues. In any event I tend rarely to recommend a long term tracker. Why bother when you can fix at 4.99% for 10 years?

Re the signature, yes its something Ive considered but as I have no need of any further business and no desire to attract any, I thought a signature might encourage people to try and contact me which I dont want. May change this, not sure.

Conrad

ReportInvestor wrote:

This is a clearly an important discussion for mortgage advisors, but I feel that the OP's question is even more important.

How badly an IVA will affect your mortgage options is surely one of THE key issues affecting whether you should go for an IVA or struggle on paying off debt.

We / MSE need a more precise answer to be able to help people who are considering the IVA option.

Early on in the discussion I made it clear an IVA would have an adverse impact on rates so it might be better to fix now prior to IVA. After 3 years many lenders will ignore the IVA so rates wont be affected.

Conrad

AndrewSmith wrote:

:rotfl: :rotfl: :rotfl: :rotfl:

Ok if I ever need specialist treatment Ill go to a GP.

Ive yet to meet a jack of all trades adviser that can compete with a dedicate mortgage only broker. Perhaps you are the one that squares the circle?

ReportInvestor

Conrad wrote:

After 3 years many lenders will ignore the IVA so rates wont be affected.

Do you think this might well change if the number of IVAs expands at the same rate as student debts are set to balloon? (Average £33K in the not too distant future.)

AndyWallace

ReportInvestor wrote:

This is a clearly an important discussion for mortgage advisors, but I feel that the OP's question is even more important.

How badly an IVA will affect your mortgage options is surely one of THE key issues affecting whether you should go for an IVA or struggle on paying off debt.

We / MSE need a more precise answer to be able to help people who are considering the IVA option.

You wouldn't usually need to go down the IVA route. If you use a recognised body such as the Consumer Credit Counselling Service, who take a complete financial breakdown of your current circumstances and recommend what amounts you can afford to repay to each creditor, you can use this to negotiate reduced payments.

Remember, there are usually multiple creditors and each of them need some form of payment, so the CCCS recommendation carries weight, and it's not an IVA.

That said, if you do have an IVA then the lender will reflect their rates on the level of risk. Therefore, conduct comes into play. How long has the IVA been running, is it running satisfactorily, etc.

So to answer the question, an IVA will adversely affect your chances of a better rate if you have no previous conduct on the IVA account.

Expect a difference of around 1.5% if you take out the IVA.

Regards, Andy