Equity clause

Lkh_2

My husband has just over 2 years left of his IVA. He took it out in August 2012. Northern Rock requested it be a 6 year IVA. My question is, after the 6 years is up, is there still a chance that we will have to remortgage or pay an extra 12 months, or will the fact that we have already paid an extra 12 months be sufficient? We are hoping to settle up early but will take into account the amount owed over the full 6 years when making our offer.
Thanks!

foxy-stoat

You really need to check the paperwork you signed up at the start of the IVA.

How are you planning on settling early? Are you getting money from family or friends?

National_Debtline

Hi

Extending an IVA for a year is often used instead of the equity release clause but as foxy-stoat says, it will depend on the terms of your IVA agreement.

James
@natdebtline

Lkh_2

Yes family plus some of my savings, hoping to make an offer in August. We just want to get rid now, would hate if we made an offer which was accepted, and then have to remortgage or carry on for another year. Will check the paperwork though.
Thanks

DorisTrousers

An IVA proposed at 6 years because of a Northern Rock modification will 99.9% certain be exactly the same as one proposed at the standard 5 years, i.e you would be expected to re-value in the 6th year, and in the event of not being able to release equity then you do another year in lieu. (There are other scenarios in which a 6 year IVA with no equity release may be proposed, e.g.shared ownership properties, but that is another issue).


Where this has happened it is usually because the Together, unsecured, proportion of a debt with NR is over the same length of time as the mortgage itself. This therefore means that NR may have been losing, say, 18 to 20 years of payments on that loan, whereas a typical bank loan may have been losing, say, 3 or 4. Therefore, 6 years was the norm for them, as in most cases the debt level was enough to make their vote casting in terms of modification.

Factor that into any offer you make, but if the offer is accepted then it is irrelevant anyway as the full and final will mean that the IVA stops at that point. If they reject, then you can either increase your offer (if possible) or if not then at least you will be aware of what journey you have left.