New info-new choice-please help

scared-sick

In light of recent information i have found out, i find myself reassessing whether an iva is now not such a good choice for me.

I am currently in a 26 year dmp. An iva has been suggested as a better, faster solution. As it stands in 5 years time i could have 7500 equity in my home to release. If house prices increase by 4% i could have 27000 available to release. Would i be better off staying in the dmp and just try to remortgage myself in 5 years to offer full and finals rather than go down the legal route of an iva?

I have only just got these figures so it kind of puts a new light on things.
I didnt expect any changes and thought a 26 year dmp was unrealistic, however, it may be that i could be debt free in 5 years without a iva. Any thoughts?

What would my chances of getting a remortgage be to release equity having been on a dmp?

Also if i did choose an iva, am i more likely to be approved for a remortgage if the equity available would clear my full debt (less interest) and if my mortgage provider was also my biggest creditor from a loan and credit card?
Would this make a difference in their decision?

UpToMyNeckInIt

It is difficult to comment, as you have only provided half the picture.

To give even a very rough idea, we would need to know an approximation of:

1). What your house is worth (as you will be limited to a remortgage/sec. loan of 85% LTV). So if your £27K estimate is realistic, by the time the £5K de-minimis trigger figure is applied your house will need to be worth more than £185K before £27K could be released;

2). Your net household income. (Important as nobody will lend more than 4x multiples of net income, probably closer to 2.5-3x for an IVA customer. So assuming your house is worth £185K, you would need to take home more than £65K per year before starting to break a sweat;

3). Your age (the loan/remortgage will not be allowed to go beyond state retirement age); and finally

3). Your anticipated Monthly IVA repayment. (Remember loan repayment is capped at 50% of your IVA repayment).

I should be able to knock up an approximate THEORETICAL scenario for you, if you provide this information.

Also, what is your current mortgage APR and repayment (just to provide a comparison).

Quite honestly though, if they want your business, your IVA company should be able to do this for you as well.

Good that you are researching all your options - a 26 DMP is just nuts.

scared-sick

Thank you.

The figures i gave are the actual equity remaining to be released after the 85% ltv has been taken off.
So 27000 is what i need to possibly remortgage for in an iva.
If i did it myself on the dmp route i would only be trying to release 14000 and negotiate with creditors.

My iva would be 125 pm so i would only be allowed to remortgage 62.50 over 20 years max. Currently at 5.4%

Obviously if i was told no on a iva remortgage and had another 12 month payments i would be better off but i cannot guarantee that.

I didnt realise the numbers might actually change things in regards to a more feasible dmp either.

Anondebtadvisor

It is your IVA and can propose whatever you like, have you suggested proposing an IVA without the secured loan provision? The worst that can happen is the creditors modify your proposal but you dont have to accept the modification and can go back to your DMP if you wished too

longtermplanner

I agree a 26 yr DMP is nuts. But ave you looked at the option of selling the house now and offering a full and final. This would have the huge advantage of certainty.

scared-sick

Something else has just occurred to me that i may have misunderstood.

If i have 27000 equity in my house that i need to attempt to release, and the maximum i can pay is 50% of my iva total which is £62.50 for a maximum of 20 years, does this mean that if it would cost me £150 per month for 20 years, it would be refused or would they ask me to release as much as i can up to the amount that equals £62.50 per month?
So if i could release £14000 at £62.50 for 20 years and the mortgage provider said yes do i do that or does it work on an all or nothing bases?

I am a bit confused about this?

SecretaryTypeBird

Sorry to jump in and I may be talking a load of rubbish but the housing market is still so unstable that you can't rely on the price increasing by 4% a year over 5 years.

We are coming towards the end of our IVA journey but at the beginning it was estimated that our house would be worth around £125k, when in actually fact it was valued last week for £109k marketing price with an actual realisation of between £97-105k which is a big difference.

scared-sick

longtermplanner wrote: »

I agree a 26 yr DMP is nuts. But ave you looked at the option of selling the house now and offering a full and final. This would have the huge advantage of certainty.

No i cannot sell at present as there is little equity at present.
It would only be a possibility in 5 years because of the extra 5 years of payments. This would then possibly give me the 85% ltv but at present it wouldnt make sense to sell.

UpToMyNeckInIt

scared-sick wrote: »

Something else has just occurred to me that i may have misunderstood.

If i have 27000 equity in my house that i need to attempt to release, and the maximum i can pay is 50% of my iva total which is £62.50 for a maximum of 20 years, does this mean that if it would cost me £150 per month for 20 years, it would be refused or would they ask me to release as much as i can up to the amount that equals £62.50 per month?
So if i could release £14000 at £62.50 for 20 years and the mortgage provider said yes do i do that or does it work on an all or nothing bases?

I am a bit confused about this?

That's right, in your case the limiting factor is your IVA repayment. Any equity release solution would not be allowed to cost you more than £62.50pcm extra (assuming your IVA repayment stays the same).

Perversely, due to the high APR's offered to IVA customers, this works to your advantage: Even borrowing as little as the 'di-minimis' trigger amount: £5,000 over 20 Years at a typical 17%apr works out at £69pcm ie: too expensive.

I only know of one mortgage product available to IVA customers, with a max LTV of 65%, and at 9%APR, yep, you've guessed it, it's too expensive.

In a nutshell, based on your figures, there is a fair chance that you will escape the equity release provision.