Are you in the last year of an IVA and have a house with equity? You may have to try to remortgage your house or get a secured loan to pay some of the equity into your IVA. This is called “equity release”
This article looks at the questions people have about how equity release works in an IVA.
An IVA that starts from July 2025 will probably be under the “2025 Protocol”. This says that there should not be any equity release. See below for details
In 2025, most people in the last year of their IVA will have had an IVA using the 2021 Protocol. These documents can be found here. But IVAs are individual agreements and the wording of your IVA may be different. I am only discussing the standard terms here.
Contents
How much equity do you have?
The starting point for equity release is how much your house is worth.
The cost of any house valuation should be paid for by your IVA. Often your IVA firm will commission one themselves, but if you are asked to get a valuation, you should be reimbursed for the cost.
If your IVA firm says your house is worth an amount that sounds too large, offer to get a more accurate valuation from local estate agents. It’s important to get a realistic figure. the number should be what the house should sell for, not what you might put it on the market at. In 20-23 this can be hard – tell the estate agent you do not want an optimistic number.
Your IVA firm may ask you to get a redemption statement from your mortgage lender. This says what it would cost to repay your mortgage now, including any early repayment charges. When I say mortgage amount in this article it includes these extra charges and also any secured loan that you have.
The equity in your house is then the difference between the house valuation and the mortgage amount. So if your house is valued at £190,000 and the mortgage amount is £105,000 your equity is £85,000.
How is the equity release calculated?
The 15% calculation
A typical IVA says you are allowed to retain 15% of the value of your house. So working out 85% of the value of your house determines how much equity you may have to release. If the existing mortgage (including any secured loans) is larger than 85% of the current value then there isn’t enough equity to remortgage.
There is also a de minimis clause, which says that if the remortgage would be less than £5,000, there is no need to remortgage.
Example: solely owned house, value £200,000 with £150,000 mortgage
- 85% of value is £170,000 – so this is the maximum possible mortgage after releasing equity;
- £170,000 is more than your mortgage, so you need to try to remortgage for an extra £20,000 to take the mortgage up to the 85% level;
- if your mortgage had been £165,000 or more, then there would have been less than £5,000 equity to release and no remortgage would be needed.
This example is taken from Annex 7 to the 2014 Protocol, but the calculation is identical in the 2010 Protocol.
Jointly owned houses
If you have an IVA but your partner doesn’t, when it comes to equity release your partner keeps all of their share of the equity. You are allowed to keep 15% of your half of the house.
If you both have IVAs (you may think of this as a joint IVA but actually it is two interlocking IVAs), then the calculations are much the same as if only one person owns the house. You each get to keep 15% of your half of the house value, which together adds up to 15% of the value of the whole house.
The only small variation is that because you each have an IVA, the calculation is done separately for each of you on your half of the house – so each calculation has a £5,000 minimum, giving a £10,000 minimum overall. It is possible your IVAs are worded differently, but this is the normal case.
Three extra limits on equity release
There are three extra forms of protection for you in your IVA:
- the additional mortgage costs cannot be more than half of your monthly IVA contribution. So if you are paying £150 a month, the larger mortgage can’t cost more than £75 more than your current mortgage costs;
- you won’t be asked to remortgage for an amount which means your creditors get more than your debts repaid in full plus the IVA fees;
- typical IVAs say: The re-mortgage term does not extend beyond the later of your State retirement age or the existing mortgage.
Common questions
“I’m only managing the current IVA payment with difficulty”
Here you need to ask NOW for the IVA payments to be reduced so they are more affordable. Contact your IVA firm with a list of your expenses that have gone up.
This is very important when it comes to equity release. You may think you can manage for just another few months, but the amount you are paying at the moment affects the amount you may have to pay to release equity – see point (1) above.
If you can get your IVA payments reduced, it means equity release will cost less and it may even become uneconomic so you don’t have to release equity, just pay for another year.
If the last year has been very difficult, it may look impossible to carry on for another year. It is sometimes possible to get your creditors to agree to your IVA being completed now “on the basis of funds paid to date” – that means with no extra payments or equity release.
This needs your IVA firm to propose a “variation” to your creditors because it involves changing what you originally agreed. This is more common with the rising cost of living and higher mortgage payments. But it can also happen if you have health problems or your income has reduced.
Talk to your IVA firm about this. And do it now, don’t delay.
“Do I have to pay for a 6th year if there isn’t enough equity?”
No. A typical clause in an IVA says
If the amount of the debtor’s net worth net of remortgage costs in the home at the review date is under £5k, it is considered de minimis, and does not have to be released, and there would be no adjustment to the IVA term.
So the extra year is there as a substitute in case you can’t get a remortgage. If there isn’t enough equity to release, there is no need to extend your IVA. Again it is possible your IVA is different, but this is how most work.
“My IVA company isn’t doing the calculations right!”
It is possible that the wording of your IVA is different. However, there are reports on internet forums of some very odd calculations being put forward by IVA firms… in most of these cases the IVA firm changes its mind when challenged.
If their figures sound wrong, I suggest you set out your situation using the exact format of Annex 7 of the 2014 Protocol (download) and ask your IVA firm to explain why its calculations are different. If necessary put in a formal complaint to the IVA firm, see How to Complain about an IVA.
“I am being told I have to take a secured loan”
Most people have a clause that says “Remortgage includes other secured lending such as a secured loan.” These secured loans can be at very high-interest rates. Readers have been quoted 15, 16, 19% or even more.
If your IVA firm is pushing you to get a secured loan, leave a comment below this article.
Very often the IVA firm can be persuaded to drop the suggestion if you push back hard enough and object strongly. The two main things to do are:
- argue that your current ICVA payments are too high and need to be reduced (see above);
- argue that the proposed loan would be unaffordable especially if you have a mortgage fix ending in the next few years.
Also if either of the following cases applies to you, tell your IVA firm as it’s unlikely that you can get a secured loan:
- you have a shared ownership house. Here it is highly likely that your Housing Association says you cannot get a secured loan. If your IVA firm says something like – well just don’t tell your Housing Association – you should immediately put in a formal complaint;
- with a Government Help To Buy mortgage you would need permission from the Homes England Mortgage Administrator to take out any further loans. That is unlikely to be granted.
Are you thinking about an IVA?
From July 2025, an IVA will probably be under the “2025 Protocol”. This says that there should not be any equity release:
- if at the start of the IVA your equity is worth less than 10k, you will have a 5 year IVA;
- with more than 10k of equity at the start, you will have a 6 years IVA.
There is no provision to release equity in the last year of the IVA. Or to add on an extra year to later extend the IVA further than 5 or 6 years because of equity.
If the IVA firm you are talking to says your equity is too high to have a “Protocol IVA”, do not agree to a “Bespoke IVA” without first talking to StepChange and seeing what they say.
Or, if you are self-employed or have a small limited company, talk to Business Debtline.
Don’t start an IVA with a firm won’t explain in detail to you what will happen at the end. Assurances that you won’t have to take a high cost secured loan are worth NOTHING unless they are in writing.
Updated July 2025
What happens if you can’t afford your IVA?
Anon says
Hello,
I’ve just had an email regarding annual review with creditfix, they want me to authorise them so they can go into my bank. I’m not comfortable giving them access to my bank, can I not just send statements myself like I have previously?
Thanks
Sara (Debt Camel) says
I don’t see why you can’t. Have you actually sent the bank statements?
Anon says
Hi Sara, previously I sent bank statements but it seems like this is a new thing so you don’t need to send them, I’m not really comfortable with giving access to my bank account. Was interested if anyone else had done their review through this new method. Mainly I wanted to check if it was mandatory to do it this new way, or if I could still just send them statements. Thank you
Sara (Debt Camel) says
It can’t be mandatory unless this was explained to you before the IVA started.
Creditfix and some other IVA firms have tried to encourage people to do this in the past, perhaps they are trying agin.
Just send your banks bank statements and say you do not like using open banking. Let me know if you have further problems.
Sue says
Hey
I’m writing this a little miffed off.
So I am with bennet jones and rang other day as still awaiting my annual review which was due in April. Submitted all documents. Payments are fine I’m not bothered about that really. But they mentioned select partnership will be in touch
Had the call with them as understood it’s part of my duty of the IVA to try release equity which will not happen in a month of Sundays however I know they will try go down the avenue of a second charge mortgage.
My frustration lies with the same company been Abbott’s before these took over when I enquired about a sprout loan to clear the iva a few years back. That it’s an individual agreement and the loan would have me paying it off longer than the IVA blah blah blah and now all of a sudden putting me in touch with this company who they swear are independent.
I feel Atleast with a sprout loan it’s not secured against the property and had they entertained it at the time it would have been 2026 out of debt not whatever this select partnership come back with.
Work in a sales job so I could have flexibility with comms payments etc and probably of been debt free by now
I’m not keen on this select partnership if I am honest feel they all work in cahoots with each other and if I am honest slightly hypocritical they wouldn’t entertain such a suggestion years ago
Sara (Debt Camel) says
There were many good reasons why Sprout loans would not be seen as acceptable by an IVA firm. Feeling cross about this does not help you at the moment.
I suggest you should consider if yiur current IVA payment is too high, eg because it hasn’t taken account of increasing expenses. Every £50 you can get this reduced by reduces the possible monthly payments to a horrible secured loan by £25.
Also consider what you know about how your finances are likely to change. Is your mortgage fixed ending soon and is the mortgage cost likely to increase? Will you have children leaving home so your benefit income drops? Have you opted out of employer pension payments and do you need to opt back in? Is your job under threat or your partners? Is your car in its last legs as you have been trying to get through to the end of the IVA? Ay you need to reduce your hours because if caring responsibilities? Etc etc
Making out a case for the unaffordabilty of any secured loan over the next few years is often your best way forward.
Sue says
Hey
Payments are fine
Car is okay just recently passed a MOT general wear and tear but that’s that just try to keep on top of it
My Iva payment is 196 at present so I understand the loan will have to 98 pound a month ?
Sara (Debt Camel) says
That’s right. Try your best to think of reasons why that will be unaffordable.
Sue says
I probably have to go down mortgage Avenue with this as fix rate ends next year in 2027.
At moment I can’t really think any other reason why it would be unaffordable but I just don’t see the loan as a good option.
I have another call with them in a few weeks to go through the options and I know the second charge will be the route they go down. Good luck trying to find a mortgage for 494 quid in this climate.
I appreciate I have to do this as IP has given them my details and I’m doing what I need to do. I’ve litrally got 18 months (6 months of 5 years and 1 year of extension clause ) left. And I feel end is in site I just want it completing and I’m done
Sara (Debt Camel) says
So you think your mortgage rate may be going up in 2026 (next year) or 2027? Are you coming Off a nice low 5 year fix?
Sue says
Yeah currently 395 a month fixed til 27.
Sara (Debt Camel) says
what interest rate is that?
Sue says
4.29% interest rate at present
Sara (Debt Camel) says
when did the fix start?
Naz says
Hii Sara
My IVA started almost five year ago and it’s going to finish in jan 2026 just few months left and I got call from my IVA they have arranged some individual agents to check equity release as I am paying £200 at the moment every month. And i have mortgage £675 a month agreement 5 years ending in 2028. And the mortgage is on me and my partner name. And at the moment I am on maternity and I am dragging myself to just finish of this IVA, I don’t have no clue how does this work and scared if they ask me to go for one more year which I really can’t afford as before I was on full work now after maternity I am planning to go back to just 18 hours or less I have two kids really hard to manage. And my partner is aswell in IVA with different firm and his IVA finish in February 2026 after my IVA month finishing. Please advise how does it work and options how to get avoid with this equity check release agents. Many thanks
Sara (Debt Camel) says
who is the IVA firm?
Naz says
It was abbots and recently been transferred to Bennet jones
Sara (Debt Camel) says
Tell the IVA firm now that you have Been struggling to make the payments to get to January even though they are unaffordable as you are on maternity leave and with three children will only be able to return to a part time job. So you don’t want a payment break as things will continue to be difficult for years, but you will Be unable to afford any equity release or an extension of the IVA for. 6th year
Naz says
Thanks for your reply Sara much appreciated.
Do you want me to call IVA or select partnership?
Couple of months ago my IVA rang to me to increase the monthly payment as I told them that I can’t afford which is truth they can see in the statements and expenses and after that conversation we agreed on same monthly payment £200, and I received email confirming my IVA that last payment date will be in January and just couple of weeks ago IVA told they have to checked the equity release check and told from select partnership individuals agents which they’ll call me and take the details for equity check.
Can my IVA stop the equity check and contact select partnership or do I need to call IVA and brief them the situation please advise that would be really helpful and kind. We don’t have any idea what to do
Sara (Debt Camel) says
I would call Select and also put this in writing to the IVA firm
(please do not leave duplicate comments!)
Naz says
Hi there! I have received the call from equity check agent as my partner is aswell on IVA he said he wants to check both equity check together but my partner have different Iva company and they didn’t advised him that they booked select to check his equity check. And when the agent spoke to me he said he can’t check my equity check because my partner did allow him to check his as he didn’t want to mix up and mess as he is just following his IVA company advise, and equity check agent told me he will send back the file to my IVA as he can’t check mine too because of my partner IVA?
Please advise what does it mean?
Will it be worried for me?
Sara (Debt Camel) says
I have no idea what that means .
Have you told Select and the IVA firm about your maternity leave and future income drop?
Does your partner know what you will be saying, as this will affect his ability to afford any equity release too.
Naz says
Yes I spoke to select and IVA firm and firm said it’s part of process to get checked once’s the file will be back I’ll take it from there. After that select rang and had conversation as my partner is in IVA aswell and having joint mortgage so they want to do both equity release check together, but my partner is in IVA with different firm and that firm advised they didn’t ask select to check his equity check release request, so I told to select look you can do just mine as my partner have different firm and they didn’t send any request to you to check his side till now. So after this conversation again select rang after two days and said if we don’t check jointly together then we have to send your file back to your IVA mentioning equity release didn’t check as my partner don’t want to finish his IVA.
If they send the file back to my IVA without checking equity what will be the next option for me?
Sara (Debt Camel) says
Well you dont want to release equity, so thats good. And you want your IVA firm to agree that you cant afford to pay another year.
Sue says
Hello
Had second call with the select partnership other day.
They were asking me if I would consider paying than the 50% rule lol. I pushed back and they said well it’s the terms of your IVA.
I get I owe the debt and I get I have to make an effort to release equity I’m not against that. But what’s been the point in a 5 year iva for them to be pushing me to pay more when they propose the stupid secured loan clause.
I’m not naive enough to know if I don’t follow this it will fail and I’m left with no choice but to dance the the iva companies tune.
The advisor for select partnership was like well if you can afford more than 50% and current Iva payment we suggest doing this. Wtf
Sara (Debt Camel) says
The alternative is that you have to pay for another year if Select can’t offer you a loan. That is a MUCH better alternative. Tell Selection No, you will not pay Moore than the terms of your IVA say as that’s what you agreed to
They should not be asking you this!