iva remortgage

clivethrush

hi all just 2 months away from the end of my 5 years of paying almost £400 per month to my iva and they say i have to remortgage my house to raise the money to pay it off. how can this be when ive gone 5 years without credit and suddenly they want me to get credit, and also from the outset they promised to wipe out 75% of my debt but now this wont happen, surely this is wrong?

National_Debtline

Hi Clive and welcome to the forum.


It sounds as if your IVA agreement will have included something known as an "equity clause". This is very common, and means that if your house grows in value during the IVA, you can be asked to attempt to release some of that increased value through a remortgage or secured loan. If you are unable to find a lender willing to offer this, you may be able to replace this with additional instalment payments over, say, an extra year on top of your existing IVA term.


It all depends on what exactly the terms of your IVA agreement set out. You should get your hands on the paperwork and either provide the details here or contact one of the debt charities to discuss this in more depth.


Dennis
@natdebtline

Lincsdebt

Hi Clive, Dennis is undoubtedly right. If you look at your IVA papers you will see "equity clause" somewhere, it might be a tick box that is ticked, nothing obvious.
You should have been asked to obtain a valuation of your house and submit it to the IVA company. They should then advise what you should be trying to raise. In our case, our house had hardly increased in value and our mortgage is interest-only so the equity in our house had not increased since the IVA started.
We still had to try and remortgage, but at over 60 and with a mortgage still that was not possible. Like you I was very unhappy and worried they would force us back into debt we couldn't repay before retirement. Payplan eventually put me on to a mortgage advisor who looked at the situation and said you won't get the extra funds they wanted (in our case over £33k).
So I had to pay for an extra year, which is why some people have a six year IVA. Mine is now finished thankfully.
Don't worry too much, IVA companies are realists, they will accept it if you have tried to obtain the funds. But it will mean it is likely you will have to pay £400 for another year I'm afraid.

clivethrush

hi thanks for the replies guys, thing is I have quite a bit of equity in my house so I don't really want to remortgage I would much prefer to pay an extra year and have it over and done with. I am now 55 and hoping I cant remortgage or get secured loan which is what they are also talking about

sourcrates

Equity clause in year 5 always comes as a shock as most people don't read there paperwork.
From memory you have to obtain 3 quotes I beleive, in order to comply with your IVA terms.

That does not mean you will be accepted for a re-mortgage, in fact its highly unlikley, so an extra year of payments is the usual payoff.