In IVA and have mortgage with Northern Rock

justwanabefree

Hi, my husband & I are in the 3rd year of an IVA and our 2 year fixed rate mortgage with Northern Rock (NR) at 4.85% comes to an end in August. We have received a letter from NR basically saying that the new mortgage rate will not be a competitive one and suggesting that we may be able to find a better rate elsewhere. As part of the IVA we have to re-mortgage our home in the 4th year of the IVA so can't attempt to source another 2 year deal to keep the costs down. We feel stuck between a rock and a hard place as the interest rate will be much higher with NR and anyone else offering a mortgage deal will charge over the odds because of the IVA. If we did get a new mortgage in August that we could afford, would it be possible to remortgage within a year without large redemption costs ? Would we be better looking at selling our property and making a proposal to settle the IVA early ?
Has anyone come across a similar situation as we would appreciate any advice at all.

dimbo61

new mortgage deal IF you can get one is going to be a whole lot more
expensive so if you can sell up and clear IVA .
rent for a few years and repair your credit rating and save like mad
for a good 15/20% deposit on your next home.
save every penny you can into the best saving accounts and live the MSE
way counting every penny you spend. GOOD LUCK

Cazza

You need to talk to a good whole of market mortgage adviser.

My instant gut feeling is that due to the IVA, you may find that the rate NR will put you on, their Standard Variable Rate, will actually be better than the rate you are going to be able to secure with a new lender, particularly if you take into account you choice will be either a new deal with no Early Repayment Charges (high rate) or a deal with a better rate but with Early Repayment Charges which you'll have to pay when you remortgage.

Northern Rock's Standard Variable Rate at the moment is 7.59%; a lot higher that you're currently paying but possible the best short term option.

Talk to someone who can properly take everything into account and get them to show you your other options.

krackers

justwanabefree wrote: »

Hi, my husband & I are in the 3rd year of an IVA and our 2 year fixed rate mortgage with Northern Rock (NR) at 4.85% comes to an end in August. We have received a letter from NR basically saying that the new mortgage rate will not be a competitive one and suggesting that we may be able to find a better rate elsewhere. As part of the IVA we have to re-mortgage our home in the 4th year of the IVA so can't attempt to source another 2 year deal to keep the costs down. We feel stuck between a rock and a hard place as the interest rate will be much higher with NR and anyone else offering a mortgage deal will charge over the odds because of the IVA. If we did get a new mortgage in August that we could afford, would it be possible to remortgage within a year without large redemption costs ? Would we be better looking at selling our property and making a proposal to settle the IVA early ?
Has anyone come across a similar situation as we would appreciate any advice at all.

you dont have to wait til the 4th yr to remortgage in order to pay off the IVA. I entered an IVA in 2003, for 5 yr term, but in 2006 i decided to remortgage my house, raise some extra cash , and offered the creditors, via the debt management company a full and final settlement offer. Just to give you an idea, i owed something like 45,000 altogether on the IVA, i paid £250 mth for 3yrs = £9000, and i then paid them a final settlement of i think it was 17500 ish so i only really paid out 26,500 to pay it all off instead of paying £45,000. also the debt management company took money from that too, the longer you keep that IVA running, the MORE money the debt management company make out of you, and if you wait to remortgage until the 4th yr so that you can clear the remaining debt on the IVA they will probably expect you to raise almost full amount of owing debt, although i think they would have to take an offer really anyway. get it cleared this aug when your fixed time is up with NR, its out of your way then, and you dont need to worry about finding new morg that 1 yr or less fixed time.


do you have an profit in your house at the moment ? if so get you house valued, and ask the estate agent for say a quick sale price and that will give you the least its worth, remorg people usually only do a drive by and use sites like www.houseprices.co.uk to see what the houses are selling for in your st to get an average of house prices there, and will give you the remorg for that sort of region. once you know how much profit you are looking at having, look for a remortgage for adverse credit people / sub prime mortgages.

The broker i used ceased trading now but i got mine through mortgages plc in the end, and just did interest only for 2 yrs until i build my credit up a bit. (to keep my monthly costs down too, with like you say the int rate being higher cos youre higher risk) before you get the remortgage write a letter to your debt management company (assuming u used one) and state that you are looking to remortgage the property in august and to raise some extra cash in order to pay the IVA off in full and final settlement. (makesure you always state its a FULL AND FINAL SETTLEMENT, its legally binding or something! ) if you ow say 20,000, offer them 11,000 to clear it off, the debt management company will then contact creditors and the majority vote wins it, so even if some reply no they dont accept it, if the majority come back yes they will, they have to follow suit also.

Also bit of advise once youve cleared the iva, leave it a few months, the order your credit file, go through it check each and every outstanding credit balance, and anything that went into your IVA as debt owed, should show current balance - 0 or satisfied. if it shows otherwise, you can either (or do both like i did) write to all them creditors using the addresses provided at the end of your credit report from experian, or write a list of all the oustanding creditors names, account number (yours) and the amount still showing outstanding on your credit file, and ask them to arrange with the creditors to have these balanaces cleared to 0 as they have now been cleared in full and final settlement. Im nearly 2 yrs on from paying mine off, managed to get most of mine sorted now, but still have to large ones outstanding, which i am still dealing with now, and obviously it will be affecting my credit even more also, i HAVE added notices of correction on these though, which when creditors do a check, it will make them aware of this correction to eb dealt with, rather than just thinking i still owing 15,000 or whatever it is.

i hope this helps you alot, dont be deceived by the debt management company in making you thinking you have to hold out that long to clear it off, they just make more money out of you, and thats means youre more out of pocket.

mattley

Good advice above, but equity release was easy in 2006 and right now it just isn't, but take heart, you're not alone.

As things stand I assume that the increase in mortgage repayments will leave you in trouble and obviously if you can no longer pay into your IVA the IVA will fail. As you're in year three of an IVA you really don't want this to happen, so you should contact your IVA providor ASAP. They often have links to specialist brokers who will know all about your situation and can often help, especially if the IVA has been well conducted.

With the housing market on the slide if you can sell up now and do a full and final, that might not be a bad thing. You could rent for couple of years, get your finances back on track and hopefully buy again after the house price cra ..err.. correction.

You need to check the terms of the equity release clause in you IVA. If you want to keep the house and can squeeze the payments but might have not enough equity in the place, especially if prices drop 20% and you need at least 80% LTV, you might need an adjustment to the terms of your IVA so talk to your IVA supervisor before you do anything, this is what their fees are for.


Good luck, I hope you get something sorted out.

justwanabefree

Thank you all for your very welcome and good advice.

I contacted the financial helpline who did a whole of market search for me for a new mortgage and the best they came up with was 10% interest rate so their advise was to stick with NR. I asked if it would be better to sell and pay off the IVA and they suggested I talk to my IVA supervisor about the best way forward. I am not in a property I particularly want to stay in as it's only worth about 90,000 with a mortgage of £67,000. IVA (joint) debts were just under £50,000 and we have paid off £12130.
It has always been our intention to pay it off early but when we looked at it last year we were told by an "independant company" that we could not raise enough funds for a final settlement. We will still be looking at that option very regularly

JWBF