IVA advice please, heads spinning!

flymo1595

I have an IVA. I was advised, after contacting payplan in September 2010 as I was experiencing some financial difficulty that an IVA was my best option.

I was having some difficulty as I was stupidly relying on the regular overtime at work to pay back my debt. And ultimately pay it off. I got injured and thus lost the overtime I had expected to earn, I then got promoted and although got a small pay rise was still earning less with the tax increase and without the guaranteed overtime from before.

I owed at the time approx £20,000, a loan, 3 credit cards, a HP agreement for a small amount and my overdraft. I could not get a consolidation loan, which would have solved the problem, as the loan payments would have been less than I was paying out covering all of these things. As a result I was paying out more than I was earning and the minimum payments on the credit cards weren’t even covering the interest. Hence the difficulty, I could not see a way out at all.

I couldn’t increase my mortgage as I was in a fixed term deal and the housing market had gone down so there was very little equity in my property.

My mortgage was with Northern Rock and was a together mortgage interest only – 175,000 mortgage at a rate of 6.29 % and 20,000 unsecured loan .

The unsecured part was incorporated in to the IVA therefore bringing the IVA to around £40,000.

I am in my second year of my IVA which runs for 7 years because of the property owned and at the end of the term if there is any equity in the property I have to release it to settle it whether it meets the full amount I owed originally or not and then its is done. A property the same as mine has been sold for nearly 220,000.

Here in lies my conundrum….

I do not want to sell my property but if I can get a remortgage for 220,000 that gives me approx 45,000 equity. Therefore I could pay off my IVA in full ahead of time. My Fixed term deal ended in March 2012 and my rate dropped to the variable rate with NRAM, which is 4.78%.

Can I do this?
How do I do this?
Can I get a remortgage?
What are the terms and rates likely to be?
Is this a good idea?
Can I offer a smaller amount (broker a deal) as a final settlement as under the IVA terms I will only have paid back around 14,000 over the term plus any equity in the property. Again how do I do this if I can?

Simple you may think but I have another problem. My property is leasehold. I have 63 years left on my lease. If I do not get a lease extension soon my property will be worth nothing and I will not be able to get a remortgage either!

Nightmare situation!!!

I cannot find out how much a lease extension will be without paying out £500 to the management company. But it is likely to be a considerable amount. Being realistic 10 - 20 thousand pounds.

Do I get a remortgage in order to extend my lease?
Can I do this while I have an IVA?
Is it a better option to do this and stay in the IVA for the term?
Can I incorporate both things in to the equity?

Another option is to re mortgage if I can, pay off the IVA get a mortgage for a fixed term and save like !!!!!!y to try and raise the cash to extend the lease at the end of the new mortgage term and improve my credit rating? Can I do this?

I have spoken to the IVA management company briefly about this problem but they are not very knowledgeable and of course it is not in their interests for me to discharge my IVA as they wont get any more money from me. But they are not unhelpful and happy to refer me to a mortgage company they use called ‘who’s lending’. But this does not overly help me, they wont see the full picture nor are they independent I expect!

I have a secure full time job and earn average money.

I need advice. My head is spinning. What is the best thing to do? If you could help with some advice that would be great.

Thank you

mrsrwallace

hi,
on an iva myself so i know a little bit of the way it works. i'm tied in to an interlocking iva which requires me to get a loan on the property on the final year of the iva to release equity but my house has dropped drastically in value and is sitting in serious negative equity and our IP even said at the time that it would be "highly unlikely" for us to be accepted for a loan on our property at the end of the IVA.

So their suggestion to me was to forget about the loan at the end of the term and just add another year on to the IVA instead. Can you do that instead of remortgaging your property? It may be less costly. It would also be less risky possibly than remortgaging.

Sorry I am not any more help.

sim11

Firstly a few things to help you with your decision.
When it comes to the re-mortgage part, you will only have to re-mortgage to 85% of the value of the property. So if in 4 years time your home is only worth 200,000 you are already mortgaged to more than 85%. If after the 85% rule has been applied, if there is less than 5,000 due. You will not have to re-mortgage.
You also have to consider that you are very unlikely to be able to re-mortgage while in an IVA.
My personal opinion if it was me in the same situation. I would save like mad, during and after the IVA. After the IVA has finished, then i would look into extended the lease. If you do it during the IVA, you are only increasing the equity. For the benefit of the IVA.
Another thing to consider, is a third party offering a settlement amount (lump sum). To propose a full and final IVA, which could be done anytime over the next few years.
Hope i have helped.

techno1029

If you have money to save your IP would be very interested in this so best not make that public eh???...get a piggy bank under your bed!!!!