Remortgaging as part of IVA

22cuddles

Hello everyone

I have about eight months to go on my IVA and part of my original proposal was that I would aim to remortgage if possible within the final year. I've just sent my most recent mortgage statement to DFD at their request and am waiting for their response. When they requested the statement they did outline that as housing markets have changed it might not be possible to remortgage and my original agreement states the IVA won't fail if this is the case. However, if they do want me to try how would I go about doing this? Will my IP suggest companies to approach or am I likely to have to approach lenders directly in which case how will I know who to try first? Any advice greatly appreciated.

Thanks in advance.

UpToMyNeckInIt

Hi, I'm in an IVA as well, but at the beginning of mine.

I am aware of the equity release clause. Mine requires that I attempt a remortgage (85% LTV) in Month 54 (for up to all of the original debt + fees + interest). If equity cannot be released, my IVA continues for another 12 months.

You will need to double-check your IVA agreement. It is unlikely that you will get a remortgage due to your credit (un)worthiness. This is probably no bad thing as 12 extra payments is usually a heck of a lot cheaper than remortgaging for up to the original amount of debt. Then you have to pay it back over the duration of your mortgage.

I believe most IPs want you to attempt remortgage with your existing lender + 1 other, and require you to get a couple of writtn valuations from 2 estate agents/surveyors.

Best of luck.

milliemonster

The difficulty is certain IP's/creditors are taking this one step further and are now insisting if a remortgage is not an option you take out a secured loan with a subprime lender to free up the funds, I know of at least one who currently is agreeing to people in IVA's taking on a secured loan.

Scary times

UpToMyNeckInIt

I too have heard of someone on another forum being pressured in the same way - no doubt this will only become more common over the next few years as more people have to consider IVAs or other credit arrangements/insolvency in these tough times.

It's a clause that I was well aware of when entering the IVA (not that I had much choice in the matter), and latest forecasts for what they are worth, suggest that property is not likely to reach its 2009 peak, again for another 5 years.

There is not a huge amount of equity in either of my properties, (especially when my Wife's share is taken into account), but my IVA wording specifically mentions 'remortgage'. So if my IP tries suggesting the secure loan route, they've got a fight on their hands.

Depth_Charge

Hi

I thought the whole point of an IVA was to get out of debt or become debt free even!

Scary indeed, the cracks are showing already.

Oh dear

kns_2

If you have more than 5k equity then you will have to remortgage.
If you don't have more than 5k then the IVA will just conclude at month 60.

If you have more than 5k and cannot get a remortgage then they usually extend you IVA by another 12months.
Just refuse to take out a secured loan as this still leaves you in debt.
Otherwise why not of taken a secured loan out at the beginning and paid all your creditors off.

If IVA companies are starting to do this then surely it would be better for everyone just to go Bankrupt.

Depth_Charge

kns wrote: »

If you have more than 5k equity then you will have to remortgage.
If you don't have more than 5k then the IVA will just conclude at month 60.

If you have more than 5k and cannot get a remortgage then they usually extend you IVA by another 12months.
Just refuse to take out a secured loan as this still leaves you in debt.
Otherwise why not of taken a secured loan out at the beginning and paid all your creditors off.

If IVA companies are starting to do this then surely it would be better for everyone just to go Bankrupt.

Hi

Yes, good post - there is a tipping point in everything and there comes a time where people cant go any further and say whats the point - then it all falls apart.

UpToMyNeckInIt

My contract specifically requires me to attempt a 'remortgage' in month 54 (subject to there being a suitable amount of equity). From what I understand, a 'mortgage' and 'secured loan' at 2 separate legally defined products.

Therefore, if my IP tries the 'go for this secured loan' approach, I think I would have reasonable grounds to refuse, arguing that the request falls outside the terms of contract.

Really concerned that this may be the thin end of the wedge: Theoretically, if the repayment is affordable, paying credit-card interest rates on a secured loan for up to 15 Years? Sounds like a real money-spinner for the banks etc. if it's allowed to take off.

Don't get me wrong: I entered into an IVA agreement fully aware that I might have to attempt a remortgage. But I may have chosen an alternative debt solution, if I thought there was a reasonable probability of having to pay back all my original debt + a disproportionate amount of interest.

Foxy-Stoat_3

Do what?

House value is £100,000 (for example)
You owe £95,000 = £5K equity = 5% LTV

No mortgage lender on the planet will lend to ANYONE a 100% mortgage, let alone an IVA'er.

I would think you need to say you don't have enough equity in your property and pay for a few more months.

UpToMyNeckInIt

...should be clarified: With most IVAs, the requirement to attempt remortgage is for up to 85% LTV based on 2 estate agent valuations. If the resultant available equity is <£5K, then the IVA ends in year 5. >5K equity, you have to attempt remortgage. If you cannot do so (most likely option), payments are extend for another 12 months.

Matt1982

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