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. If you are thinking about an IVA, you need to know about this before signing up.
In 2023, most people in the last year of their IVA will have an IVA using the 2016 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?
If you looking at an IVA, do some calculations using possible different values for your house in 5 years time. I suggest three – one optimistic, one no price change and one somewhere in the middle.
You need to ask your IVA firm to explain to you how much equity you would have to release in each of these three scenarios.
If the IVA firm just says that it won’t be a problem, persist. Say you want them to confirm how much you will have to remortgage for if your house is worth A,B or C and your mortgage is worth X.
If they won’t tell you this, or you don’t like their answers, go and find a different firm! Seriously.
And read the bit above about “secured loans” – it’s scary stuff!
Ask your IVA firm to confirm if you may have to take out a secured loan. If they say yes, ask them what safeguards there are against this being at a really high-interest rate. If you aren’t happy with their answer, walk away and talk to a different IVA firm such as StepChange.
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 secured loan are worth NOTHING unless they are in writing.
Updated October 2023
Inflation – can you cut your IVA payments ?
Repairing your credit after an IVA
What happens if you can’t afford your IVA?
Graham says
I am at the equity release stage of my IVA and was wondering if there are any standard template letters for persons in my position to use when contacting mortgage lenders when making the required attempt to re-mortgage, or any guidance on making such applications, as this must be a common scenario.
Sara (Debt Camel) says
Hi Graham, there aren’t any template letters, you just make a normal mortgage application. Most banks wouldn’t read a letter anyway, they would just tell you to complete their form! Assuming you don’t want a re-mortgage (for most people making another year of payments will work out much cheaper) and there isn’t a horrible “secured loan” clause in your IVA (who is your IVA firm?) then just apply to a couple of high street banks and then send your IVA firm the rejections!
Alan says
I have been in an iva for 8 years, finished my payments 3 years ago, now they decide that they they will look into any ppi due, also equity release. I am retired now and only on basic state pension, so no chance of remortgage or anything, dont know where I stand now, please advise.
Alan.
Sara (Debt Camel) says
Hi Alan, this is a very long delay after your payments ended. It may be that your IVA firm has now realised that you can’t release equity and the PPI is just what needs to be sorted before your IVA can at last be closed. I understand that you are worried, but I think you have to contact your IVA firm and ask for confirmation that your IVA will be closed if you sign the PPI papers.
Alan says
Hi Sara
I already signed them and sent them back, all I need is this episode to be finished, I will keep you posted,
Thanks
Alan
Peter Miln says
I am currently in an iva. I will reach retirement age 2 years after my 5 years finishes how will this effect me? I have advised them I cannot extend this owing to my age and failing health.
Sara (Debt Camel) says
In that case it’s highly unlikely that you will be able to release equity in the 5th year. If you have more than 15% equity you will probably have to make an extra years payments. That is assuming that your IVA is set up on the most normal basis. You could talk to your IVA firm to confirm this is what is likely to happen.
Tina says
My husband is in a 3 year Iva . We have a joint morgage. I have tried to re morgage but the bank won’t give me one on my own and won’t give my husband one because. He is in an Iva they said. They have wanted our house from the start but 2 years on we are still here. Now we have been given till may to sell or they will auction. The house . Leaving four of us and two dogs homeless . The inland revenu man would not agree to anything less at the meeting. He wants my husbands equity from the house and I don’t have the funds to by my husband out. They won’t. Extend the Iva . Is there anything I can do. Regards Tina
Sara (Debt Camel) says
Hi Tina – this all sounds rather complicated. I have emailed you for more details but not had a reply – could you check your spam box?
sally says
hi, wondering if you can do the equity calculation for me please, i have a outstanding mortgage of roughly 69,500, ive had the house valued 90-95,000, i’m at the equity release stage of my IVA and am now stressing that they’ll want me to remortgage, the amount I’ve had to pay over the last 5 years i feel has more than covered the amount i owed initially and a remortgage would put me back to square one,
Sara (Debt Camel) says
Hi Sally, I am assuming the house is just in your name.
Taking a value of 90k, the standard calculation would be 85% is £77,400, so you would be asked to remortgage to release £7,900. This is more than the de minimis amount of £5000.
It’s pretty unlikely that you will be able to get a remortgage – just apply to a couple of high street lenders and they will say no. Then in most IVAs you will be asked to make an extra years payments instead.
Let me know if the IVA firm suggests you might have to take a secured loan!
Andrius says
Hi I have left 6 months on my iva,I got an email today saying that they will look how much equity I have,well that’s fine but my debt was 18000 and by the end of term all 18000 will be paid back plus around 3000 on my ppi claims. So how much more money will I have to pay?Also do I have option not to release equity?
Sara (Debt Camel) says
You can’t be asked to pay in more than 100% of your debt PLUS IVA fees PLUS (sometimes, it depends on the terms of your IVA) 8% statutory interest. The £3,000 PPI you mentioned will probably be quite a bit less as the claims firm will take a chunk out of that.
You are unlikely to be able to release equity – its almost impossible to remortgage in this situation so most people with sufficient equity (see this article) have to make an extra years payments.
Agnius says
But how much more do I need to pay with my debt all paid minus interest?
Sara (Debt Camel) says
Ask your IVA firm to tell you and to give you details of how it is calculated.
Kim says
Hi if the remaining length of my IVA clears off the original amount of the debt can they increase the length of my IVA or as for me to release equity in my property?
Sara (Debt Camel) says
The maximum you can pay is the amount of your debt PLUS the IVA firms fees PLUS (sometimes, it depends on the wording of your IVA) 8% statutory interest.
So depending on how these calculations work out for you, you may need to release equity – but that is very rarely possible, much more common to have to make up to an extra year’s payments.
Rhonda says
Hi, we took out an IVA and in May 2016 we will be starting our last year of payments, I understand that they will want us to try to get a remortgage but we also have a secured loan in place as well which was there when we started the IVA and it ends after the 5yrs of the IVA as well, do you think we would have to pay an extra year of payments as over the last 4yrs we have paid our monthly payment but also paid extra money in due to overtime being on our wages but this has stopped now and we are starting to find it a bit of a struggle especially if we needed to do an extra years payment.
Thanks in advance.
Sara (Debt Camel) says
hi Rhonda,
whether you will be asked to make an extra year of payments will depend on how much equity there is, not how much you have paid into the IVA so far (well not unless you are close to repaying your debts plus IVA fees in full? Most people aren’t.)
If you are struggling at the moment because your overtime has reduced, I suggest you talk to your IVA firm about this. When it comes to a 6th year, if you can’t afford it then the IVA firm could propose to your creditors that your IVA is completed without it.
Nicola says
Hi
I am just starting our final year of IVA and have made all the payments asked of us, we were never told at the beginning of this process that our house will become part of the debt, We have also received PPI refund of over £22,000 , which they have taken. We are on an interest only mortgage, and I am absolutely certain we will not get a re-mortgage due to our age and situation. What happens if we have about 15% equity in our property? We have children who still live at home and need to know if we can be forced to sell our home ? With then no chance of ever getting a mortgage to secure a new home and future for our family?
Sara (Debt Camel) says
Hi Nicola, it sounds as though your IVA firm has done a very poor job of explaining what an IVA involves to you :(
For the large majority of IVAs there is no risk of you being forced to sell your house. If you can’t remortgage, you are likely to have to make another year of payment – do you have a copy of your IVA agreement that you could look at to see if this is in there?
Steve says
Hi
I believe my IVA is over April 2010 to 2016, but I have not yet had any notification from my new supervisor Creditfix (was PJG recovery)
I have had no month 66 request for remortgage equity release and after reading the above and struggling for 6 years, I am very concerned about what I will be told when I call them to find out whats going on. Can they make me sell my house? This level of detail was never discussed when i decided on the IVA, It now feels that I may have been better going Bankrupt
Sara (Debt Camel) says
Hi Steve, it would be very unusual for your IVA to have had any clause about having to sell the house – and PJG had a good reputation for being straightforward with their clients.
It is a pity that you have been transferred to a firm you don’t know, but I am afraid the best thing you can do at the moment is contact Creditfix and ask when your IVA will be finishing. See what they say about equity release.
Christine says
Hi
My husband and I are in our 2nd year of a joint IVA. Our mortgage is made up of a repayment mortgage and an interest only mortgage which are due to end in November 2017. The interest only part is around £52000. There is no way we have the money to pay that, the mortgage company will not let us go beyond next November as we are in an IVA and have told us to seek independent financial advise. As I see it, we can either have equity release or sell. The IVA is for around £125000 and the house is probably not worth the amount of the IVA plus the interest only mortgage. Also, we can’t seem to find an equity release company that will deal with us whilst on an IVA.
Can you give us advice as to what happens when we sell the property?
Sara (Debt Camel) says
I am pretty shocked that you were sold an IVA with your IO mortgage finishing in the middle with no clear plan for what to do. I suggest talking to a “bad credit broker” to see what your remortgage options might be, but they may well be too expensive for you to be able to continue with the IVA.
Samantha says
Hi I need advise. My partner has 2 properties, one is our family home and the other my sister lives in. He is in his last year of iva in which they have just asked for valuations. Can they make him sell the second property if there is enough equity in it?
Sara (Debt Camel) says
Hi Samantha, I hope the IVA company will have discussed this with your partner before the IVA was set up? He should dig out the IVA terms & conditions and read them, then talk to his IVA firm about what will happen.
Mary says
just about to go into iva as I have being with a dept m company for the last7 years they said I would need to go into I VA. don’t nearly. Know about I VA. my mortgage is due to be paid up in 3 years Our only income is state pension Our debt is £32 k Can they make me sell can I move while on a IVA or do we have to wait till the Iva 5 years are up thank u
Sara (Debt Camel) says
Stop!
These are really important questions and you absolutely must not start an IVA without being clear what is involved. Take another few weeks to look at all your options, an IVA is a legally binding contract, you can’t later change your mind.
How much is the IVA firm saying you have to pay every month? Can you really afford this for 5 or 6 years? What will you do if the boiler needs replacing or the car fails its MOT?
If you cant afford the IVA repayments, then its possible you may be made bankrupt because you have such a lot of equity. That would be a disaster.
If you sell the house when you are in an IVA you will have to pay into the IVA: – the full amount of your debt PLUS the IVA fees (which will be several thousand pounds) PLUS 8% interest on your debts (which can add up to a lot).
If you think you may want to move (or if you are worried you won’t be able to afford the IVA fees for 5 or 6 years so you may have to move) then you would probably have been much better off selling the house now and repaying the debts. No IVA fees. No 8% interest. And you may even be able to get some full and final settlement…
I have sent you an email about this – perhaps it is in your spam box?
NIck says
Hi – my wife is in an IVA for her unsecured debts (I am not) – she is named on the mortgage deeds, but pays a low percentage of the bills and mortgage. Our mortgage is a private one, so the mortgage lender will not be inclined to allow a remortgage (and I haven no desire to enter into one). The IVA company have asked for a valuation (or a free onlne one) and I am quite friendly with and estate agent. In addition given I would be unwilling to remortage which would be on unfavorable terms , and the mortgage redemption figure could in theory be vague, are the IVA company likely to try and enforce a remortgage. Unusual situation!
Sara (Debt Camel) says
AN IVA can’t force a remortgage if there is no willing lender – this isn’t unusual, it is the normal situation these days. Unless your wife has a “remortgage or secured loan” clause in her IVA – which would be unusual for IVAs taken out several years ago, then it is likely she will just have to make an extra year of payments instead of remortgaging.
Steve says
Hi, I have just paid my last payment on my IVA Which has included £16k in PPI re payment, and when asked what is the next process, I was told I will need a valuation on my property, and a Redemtion from my Mortgage provider, only then will they re-access. I have a value of my property of £168K and I owe £85k on my mortgage, I am not in the position to re-mortgage or get a loan, what would be the asking price from my iva to clear this burden from my shoulders.
Sara (Debt Camel) says
As this article explains, for most IVAs if you can’t remortgage the alternative is to make another year’s payments.
Steven says
Hello,
Hope you can help! I have 2 properties that are rented and i live in a rented property myself. Shortly I will be asked for a valuation on the properties. One of the properties will have around 7k equity in it, but the other will be around 20k in negative equity. Will they make me remortgage/pay another year?
Sara (Debt Camel) says
It is very unlikely you could remortgage a BTL with only 7k of equity. I am afraid you will have to check your IVA T&Cs to see what the equity release/12 month extension terms are for these properties.
maria says
Hi
my husband is entering into his last year of IVA and we have received the letter asking for the mortgage information etc.
we have approx. 3 1/2 years left and approx. £55,000 o/s on the joint mortgage which is being paid on an interest only basis, with not much provision to repay at the end of the term as most of the money is taken up in IVA payments (£499 per month). our property is worth approx. £220,000 . my husband is 61 and I am 57 . they say that the IVA is a joint one, but there were only 2 creditors taken into account that my name were on.
what is the approx. figure that they would ask us to re mortgage for in the house which is in joint names.
we are happy to continue to pay the IVA for another year , but desperate not to re mortgage so that we can start paying the money that is being paid for the IVA off the mortgage as we are going to have to extend the term.
Sara (Debt Camel) says
It’s hard for anyone in an IVA to remortgage at the moment. If your mortgage is Interest Only with 3.5 years to go it is vanishingly unlikely!
maria says
HI
My husband’s IVA is with Pay Plan – are they a company that try and get you to take out a secured loan at the end of your IVA ? I had never heard of this until reading comments on your site.
he is willing to pay the additional year, but the thought of a company hassling to take out secured loans at the end of the IVA terms fills us with horror
Sara (Debt Camel) says
I haven’t heard of anyone having this sort of problem with Payplan :)
maria says
HI – following my previous emails, we were not able to remortgage the house so the IVA was extended for a further 12 months, so should be ending in June 2018. Relief we felt!
However, we now have had emails from our IP saying that we will not achieve the minimum dividends that were allocated at the time of taking out the IVA – only 37% compared to a required amount of 75%!
Panic again – what will happen here?
We have been asked to provide a small paragraph saying why we want the further hearing and for the creditors to reduce the dividend.!
a, I don’t know what to put, and b, how likely is this to be, and C, what happens if they don’t reduce the dividends! We could be paying this for the rest of our lives!!
I thought that IVA’s were a way of getting out of debt stress free, but this is certainly not being the case.
Sara (Debt Camel) says
Has anything changed since you started your IVA which means you have been paying less than was expected?
maria clyesdale says
Hi – no still paying the same amount as what it was set up at. Pay Plan are the IP
thanks
Sara (Debt Camel) says
Were you aware there was a minimum dividend clause in your IVA? Was this a change asked for by your creditors when the IVA was proposed?
When an extra year was agreed instead of a remortgage, was a variation done at that time?
Paul says
Hi I’ve just finished the final five year payment on our iva.im 58 59 in October when my mortgage finishes also.still not Herd what will happen next and will I after remortgage release equity or pay another twelve monthly payments .told when first enquired about an iva with company I’m with I was unlikely to get remortgage so would proberly after make another years payments.hope you can advise me .thanks
Sara (Debt Camel) says
It does sound as though a remortgage is unlikely but you need to talk to your IVA firm urgently about what is happening and whether a 12 month extension is needed. Is your mortgage repayment or interest only?
Paul says
I mortgage is repayment and some interest only which is £24.000.£16.000 is due in end October .rest end of June 2017 which is £8.000 .
Sara (Debt Camel) says
Do you have a plan for repaying the IO in October?
steve says
hi I have plan to enter in to iva as i and my partner have£80000 unsecured loan . we have bought the property last year £315000 the outstanding mortgage at the momet is 215000 .can I enter in to iva if so what will happen to my house at the end year of iva do I need to release the equity or can I pay an extra year payment.please help
Sara (Debt Camel) says
Based on those figures you have more than the 15% equity in the house so yes, you would have to try to release equity at the end. At the moment that would be about 50k of equity to release – obviously that could go up or down depending on house prices.
If this was now, you would be unable to remortgage – it is possible this could change by the end of your IVA but you may feel it’s OK to take this risk so you would just have to make an extra year of payments.
However you may be asked to take a secured loan instead of a remortgage. I think these are very bad news, see https://debtcamel.co.uk/iva-secured-loan/. If you go for an IVA you need to find an IVA firm that does NOT have the “secured loan” clause in your IVA – some of them don’t. Make sure you ask about this and get an assurance in writing that you won’t have to take out a secured loan.
One other point – you said “a 80,000 unsecured loan”. Is this a single loan? Because if it is, that creditor would effectively have a veto over whether your IVA would be approved.
Vicky says
What would the equity be if our house is valued at 120000 but we have a mortgage and a secured loan which we owe 82288 thanks
Sara (Debt Camel) says
do you both have IVAs?
vicky says
It is an iva in both our names
Fran says
I am in the last six months of my 5 year IVA. I have just had my property valued and it is worth £110-115000. I have an outstanding mortgage of £61000. My supervisor has said that I have a lot of equity in my property so I am expecting to have to try to remortgage. I did not realise that I would have to make an extra year of payments – I thought this would be the end in December and that I would be free of this. I am making what I feel to be hefty payments of £468 per month and have paid over and above up until this year when I changed jobs and my overtime ended. How much would I be expected to remortgage to and pay to my IVA. Would it just be the 12 extra payments?
Thanks for your help
Sara (Debt Camel) says
Most IVAs have a clause which says you would be expected to try to remortgage to increase the mortgage on your property up to the level where you have 15% equity remaining, so that would be increasing your 61k mortgage to about 95k.
If you can’t do this (and it is incredibly unlikely you could remortgage), then you are normally asked to make 12 months more payments instead. If you are struggling to pay £468 a month, you should ask for a new income and expenditure review to be done.
Steve says
Hi I have payed 4 years and 7 months on my iva and now been told that I’m going to be made redundant in October ( which will only be around £3,000) or I can can take voulentry ( approx £10,000 )in September .I still owe £60,000 on my mortgage the house is approx valued at £95,000. Is voulentry classed as a windfall sum or can I offer a full and final payment ? If so how it is calculated …..
Sara (Debt Camel) says
Redundancy payments are classed as windfalls – you need to talk to your IVA firm urgently about your options here as you presumably have a near deadline for taking voluntary redundancy.
Sergio says
My IVA is ending in 4 months now the company who deals with my IVA passed my information to another company,they contact me saying a remortgage isn,t possible they want me to do what they call (second charge mortgage) paying around £91 for the next 300 months(25years) is there anything I can do to finalise my IVA
Sara (Debt Camel) says
Hi Sergio, see this article: https://debtcamel.co.uk/iva-secured-loan/. If your IVA doesn’t mention taking a secured loan, then you should say you are not obliged to do this – the alternative will be to make IVA payments for another year.
Beth says
Hi, we have an interlocking IVA and have just been asked for a house valuation. This has been valued at £160,127. Our outstanding secured debt is £134,651.05, but including the early repayment charges on the mortgage, our LTV is 86.13% therefore the is no available equity to release and we are not required to try and re-mortgage. Aperture (IVA company) however has requested that we pay an extra year in lieu of the net worth equity which they have calculated as £14,110.94. Is this right? Are we required to pay an extra year in lieu of net worth if there is no available equity to release? Any advice would be much appreciated as we are completely confused.
Sara (Debt Camel) says
Have you looked at the detailed terms of your IVA? I suggest you back to Aperture and point out you have less than 15% equity at the moment so you don’t understand why you are being asked to make an extra year of payments.
Nick says
Hi. My wife has now reached the remortgage stage of her IVA. From my calculations the LTV atio of the current mortgage stands at 86.1%. This is based on the mortgage redemption statement and the valuation I have provided at their request based on the lower figure of an online valuation (they said an online valuation is acceptable) – I belive the lower figure is acceptable. The valuation is aproximated 171,000. The IVA company has state dthat the morgage amunt is 84% of the property value (it isnt` – my mathss better than theirs), and they want aproximately 22,000 or another 12 months of payment (she wont get a remortgage, and I am not part of the IVA). The diminimis clause apparenly doesnt apply as that is based on a less than 5k after a 100% LTV calculation . Her share of the equity based on 100% is approximately 12,000 – they are quoting avaiabel equity of more than double that, and have some pretty strange calculations in all honesty.
Is it worth challenging their maths as a remortage to 85% of the property would actually be for a lesser sum than exists now ( ihave challenged this initially but they have said its 84%) , and will this lead to a conclusion of the iVA if I demonstarte that they cant count, or can they enforce teh extra 12 months anyway despite the LTV of the mortagge being 86%, so there is actually no equity to release up to 85% despite their insistence there is?
Sara (Debt Camel) says
I can’t see any downside to challenging their maths if they are incorrect. I can’t comment on the T&Cs of your wife’s IVA and how they are interpreted, but it should only be her share of the equity that is being considered.
Nick says
Thanks for the reply. If I can prove that the mortgage is already above 85% equity (which I can), can they force her to make an extra years payments or would the IVA conclude at the end of year five?
Beth says
Hi Nick
We have just been through exactly the same thing. We were told that we were mortgaged to 86%, therefore was unable to release any equity but they were then asking for 85% of our interest in the property which was £18,000. When we asked for their calculations these were very different to the IVA protocol Annexe 7, and to the example our company provided us when we took the IVA out. Have a look at your initial documentation for an example of the calculation. In ours this was in the copy of the initial meeting and was the same as Annexe 7 of the IVA protocol. We emailed the company and provided them with the initial calculation method and asked them to recalculate using this calculation method as that is what we had agreed to. I have to say our company was great, they agreed to recalculate and did so the same day. Our house was then removed as an asset. Hope this makes sense and Good luck
Tracey says
Hi we are in our last year of the Iva , i the Iva company changed throughout the five years by selling our debt tho them, we have a interest only mortgage, we brought house for 175,000 worth we believe around 250,000, I am really anxious as if we are made to remortgage our monthly mortgage payment will go up and that then puts us in more debt. Can someone advise pls .
Who is going to give us a valuation free .?
Sara (Debt Camel) says
You can just ask a local estate agent to give you a valuation. If your IVA firm don’t think that’s good enough and want a paid for one, then they should pay. It is VERY unlikely you will be able to remortgage so you will probably have to make an extra year of payments instead.
Maria says
My husband & i are about to finish iva December this year and our iva firm advised to attempt to re mortgage 85% LTV was calculated to £45,000 , if we are approved for remortgage this amount will be paid to creditors and we will pay longer with lender? I would prefer paying for another year but will they stop looking for more to get what we can give them on the 6th year of payment? My mortgage is repayment and never missed my monthly payment.
Sara (Debt Camel) says
It is very unlikely that you will be able to remortgage! In which case you will have to make the extra years payments instead.
Locky says
Hi could you give a equity release guide please My home is roughly valued at about 130.000 and i owe 94.000 on mortgage how much money would i have to try and give my iva .
Sara (Debt Camel) says
Assuming you own the house (as you don’t mention a partner), and that your IVA has the typical “allowed to retail 15%” equity” term:
85% of £130,000 is £110,000, so that is the remortgage you would be asking for, ie an extra £16,000.
The chances of you getting a remortgage offer is very low! SO you should expect to have to pay an extra year’s IVA contributions instead.
Locky says
Hi thanks for you feed back
Just some quick info due to my iva being transfer from pdhl to knightsbridge my iva equity release was not done in the 54th month as started in my terms and conditions i infact had to ring and send several email to Knights bride asking them what was going on . i then got a letter staying they have extend the iva while they look at my equity . the issue i have with this is that come march 2017 i have completed 6 years of the iva so how cane they make do a extra 12 month because that will be 7 years of a iva
Sara (Debt Camel) says
It is possible your IVA may have been 6 years at the start? You need to look at your original documents and talk to Knightsbridge if this doesn’t seem correct.
John says
Hi I am coming to the end of my 5 year IVA and they have asked me about my Equity Review. My House is worth around £230,000 with a joint mortgage of £177,000 redemption. My debts were £27,000 and I have been paying £140 a month to my IVA , I would like to keep paying another year of £140 to my IVA than remortgage. My IVA says I must remortgage (no mention of LOAN) to release my equity. I assume if I ask for a mortgage with the banks that I owe my IVA debts to they will be a decline a mortgage and the IVA will have to accept another year of paying £140
please can you advise me on the likely outcome from the above.
Sara (Debt Camel) says
The chance of you being offered a remortgage is very remote. Most high street lenders will turn you down immediately because of the IVA. Another year of payments is the much the most likely result.
John says
Hi Sara, thanks for your advise, going on the numbers above, if I have to go through the motions of applying for a remortgage to show the IVA people my decline letters how much would I roughly be looking to remortgage for?
Sara (Debt Camel) says
Assuming your IVA has the typical terms relating to equity release (you will have to read it to make sure):
Your share of the property is worth 115,000. You are asked to remortgage to 85% of this, which is 97,750. Your current half of the mortgage is 88,500. So you need to increase your mortgage by 9,250 to 186,250.
Your IVA firm should be able to confirm that this is the amount you should be asking for.
John says
Hi Sara,
Thanks for clearing that up for me, I just need to pray I cant get a remortgage then
Dave says
Hi Sara, my wife and I started an IVA just over 5 years ago, on 31st October 2011, and we pay paid our 60th payment on 20th October. I was fully expecting our IVA company to have contacted us to make some kind of acknowledgement that we have completed 5 years, but they haven’t. They also haven’t asked us to try to re-mortgage in the past year either. I sent off my annual review last week, and asked them what happens next. Do some IVA companies automatically set up the one extra year of payments without asking us to remortgage, or are they still likely to ask us to do this, even though we are already into our 6th year? According to Zoopla our house is worth approximately £240,000, and our mortgage is £108,000, so we have some equity, however I would be surprised any bank would allow us to remortgage. Many thanks. Dave.
Sara (Debt Camel) says
Hi Dave, you should read https://debtcamel.co.uk/end-of-iva/. A firm won’t usually set up a 6th year without talking to you, but in your case it sounds very likely that a 6th year will be needed.
Dave says
Thank you Sara,
I’ve been reading through my original contract, and it says that 6 months prior to the expiry of the IVA there should be an attempt to release home equity. (this never happened)
It also states on the next page; “In the event that there is enough equity to be released in month 54 we do not feel given our circumstances that we will be able to obtain a remortgage, for this reason we have shown an extra 12 month payments in lieu of equity to give our creditors a more realistic estimated dividend payment”… Does this mean the extra 12 months of payments was already agreed on day one?
Also, when the IVA was first set up, my wife had an M&S credit card which we did not add to the list at first, as it had a small balance. This was later added a couple of months later. Could this possibly increase the length of the term?
Thanks for your help.
Dave.
Sara (Debt Camel) says
Always a good idea to read your contract :) However the extra 12 months was not agreed at the start, it was given as an illustration.
The extra debt shouldn’t have changed the term if it was small, see https://debtcamel.co.uk/add-debt-to-iva/
Graham says
Hello Sara,
I am in my last year if my IVA, I lost my job in February so I had a 6 month extension to my plan agreed by my creditors, I have just received a letter about equity release from Payplan. I will be 62 next February, can’t see me getting a mortgage even though I own my home.Would an extra year be more likely ??
Sara (Debt Camel) says
12 more months is massively more likely.
Jacqueline Patterson says
Jacqueline
My son had taken out an IVA his five year were up October this year the company dealing with it has been in touch telling him he needs to
re-morgage his property to releash any equity, they sent a letter to my son saying they have had my sons property valued and included the valuation, his partner called them and said how is it possible to value my home no one has been to view it there answer was we did it on line how does that work, I have found out since I can go and do the same thing it is not a proper valuation just more a guidline.
1. First where does he stand with getting a real valuation
2. The second thing they are telling him they can arrange a re-morgage with their sister company that cannot be right
3. If he goes for the extra year his payments are going to be a least £150 more a month plus an extra from his ex partner of £39 it will be well over £500
4. This extra money will leave him with nothing as he has his rent to pay on his flat also child care and payments for his morgage plus they are saying after the extra year is over he will still have to pay a lump sum.
any advice would be useful it sounds to me they are making it up as they go
Sara (Debt Camel) says
It’s good of you to look into this, but really he needs to do it himself as things can “get lost in translation” when someone is talking about what they think another person’s position is.
I have no idea what the “lump sum” you refer to is.
If he considers the valuation is too high, and that if it was lower this would change wether there was enough equity to release, he needs to talk to his IVA firm about getting another valuation.
His payments shouldn’t be more in the last year unless he is earning more – and even then his additional expenses need to be taken into account.
Chris says
Hi Sara, I am at month 54 and have been asked to try to remortgage. However unless I have researched and calculated incorrectly I do not believe I should have to try to remortgage and should be asked to enter into a sixth year of contributions.
Our house has been valued at £150,000.00 and our outstanding (joint) mortgage is £121,000.00. The IVA is in my name only.
My calculations are £150,000.00 / 2 = £75,000 x 85% = £63,750.00 less £60,500.00 (my half of outstanding mortgage) = £3,250.00
Is this calculation correct? If so I presumed that I am below the £5,000.00 threshold and would’nt be asked to remortgage.
My IVA company have written to me and said because my equity is £14,500.00 then I need to try to remortgage.
Many thanks
Sara (Debt Camel) says
It’s worth checking your IVA documentation to make sure it has the standard equity release clauses. Assuming it has, your IVA company appears to be ignoring the 85% part! I suggest you point this out to them and say that once this is taken into account the remortgage would be for less than £5000 so it is de minimis and you do not have to remortgage OR make an extra year’s payments.
Jade says
I am due to complete my 5yr iva in may 2017. Due to not being able to release mortgage equity I have received a letter stating I must extend my iva by a further 12 months. I am with payplan. This means I would be in an iva for 6yrs. Once the 6yrs have been completed would I be asked to release equity from my mortgage again or consider paying extra years to compensate? Also a family member has said they might be able to gift me the 12months (6yr) money upfront as a full and final settlement so my iva can end at year 5. How would this work ? Would they still want me to pay for the extra year or expect me to continue making more payments or would my iva come to an end immediately
Sara (Debt Camel) says
The extra year is instead of releasing equity, your IVA will end at the end of thit, you won’t be asked again about equity.
An offer from a family member to pay the 12 months money needs to be made to your IVA company. When this is accepted it will end your IVA with no further payments from you. DO NOT accept this giuft now and then try to sort out ending your IVA, it is important that the IVA firm understands this money is onlt on offer IF they agree to end your IVA.
Jade says
Are the likely to accept the 12 months money upfront? Or make me keep to the 12month payment agreement. Also how would this be paid to them. Would I get the family member to pay them direct or to pay me and I then make the payment? Are you also able to confirm that they cannot ask for a further mortgage review. Thank you
Sara (Debt Camel) says
Yes, very. The only reason I can’t say it WILL happen is because until the review at the end of the fifth, year, it’s possible the amount could change or you could owe money from overtaime or something… But when you are at the point of knowing exactly what the 12 months months payments will be, your creditors will be delighted to accept these up front as a lump sum :)
You can discuss the mechanics of paying the lump sum with your IVA firm. And I can confimr they won’t ask for a further mortgage review even if you make another year of payments.
Nicky says
Hi my partner and I have been out of an IVA For 18mths, we have are completion certificate.
We are thinking about selling our house, as we did not remortgage it. My question is if we sell now are the IVA company still entitled to take some of the equity
Thank you
Sara (Debt Camel) says
No! Your IVA has finished, the house is all yours. Your IP should have removed the RX restriction on the house already, see https://debtcamel.co.uk/end-of-iva/, so check up on that now and get back to them if it hasn’t been done by mistake.
Jade says
I have submitted the full and final offer as previous discussed with you and my supervisor has agreed to a meeting being put in place. However the IVA firm are now saying that the creditors could make me file for bankruptcy if they are not happy with this offer !! This is really worrying. Is this correct? And does it ever happen! Also could I refuse to go bankrupt and just pay the extra 12 months instead! Please help as this is causing me concern thanks
Sara (Debt Camel) says
The offer is from a family member to pay the 12 months extra in a lump sum now? If it is, I can’t imagine why it wouldn’t be accepted.
Tony says
My motgage is shared equity the builders own 25% the value is about 102000 and the balance of my share is 62500 I’m in the 5th year of my iva would I need to remortgage or pay the extra 12 month
Sara (Debt Camel) says
The value of the house is £102k so the builders have 25% of that? When you say “the balance of my share” do you mean that is the size of your mortgage?
Tony says
62000 is what I have left to pay on my share the builders own 25% of the sale price my mortgage was for 82000 in 2008 and is now 62000
Sara (Debt Camel) says
OK so if the valuation of 102k is accurate, your share of the property is worth 75% of 102 = £75,500. If your mortgage is 62,000, then you have 13,500 in equity which is less than 15%. On those figures it may not be necessary to remortgage or to pay an extra year. You need to talk to your IVA firm about this.
Tony says
Thank you for your help
Tony says
I’m going into my 5th yr review and I have 2000 ponds saving in my account will they take it
kathryn says
Hi my husband and I have just finished the 1st year in an iva and it has gone up from £323.00 to £589.00 we cannot afford this payment so I have discussed this with them. The only worry I have is that a loan on my mortgage is on the iva can I put this back as it was and pay it as before. The house loan is £20,000 and the other debt we owe is £22,00 so £42,000 all together. Can they take my house and make me go bankrupt or can I offer to pay creditors myself.
Thank You
Kathryn
Sara (Debt Camel) says
What has the IVA firm said about the payments being too high?
You have a secured loan included in an IVA? That is unusual… Is your house in negative equity?
Chris says
Hi Sarah,
Just have to say you have been giving good advice.
I am into my 3rd year of my IVA and cheeked my mortgage and it is £74600 and had 2 estate agents value the house ant it is worth £15000 – £12000. Could I try and remortgage and offer an early settlement? I’m currently paying £299 per month. I couldnt remortgage when I started in 2014. I have been paying my full mortgage amounts sine 2010. Could I get a remortgage? I would use it to pay off my IVA.
Sara (Debt Camel) says
Unfortunately you would find it almost impossible to remortgage until the IVA marker disappear from your credit records.
AB19 says
Hello Sarah,
I’m waiting for my annual review March/April this year which will take me into my 6th and final year. During my iva, I gave the keys of my house back to the mortgage company and do a voluntary repossession as this was the best way to get rid of my ex marital home that only I lived in. I had a secured loan on it and the loan company who had the 2nd charge on the house would not allow me to sell it as the equity released would have not fully covered their loan in full. So this then became an unsecured loan and another creditors meeting was arranged to see if they would accept this. This was about 1 year into the IVA. They agreed as long as I added another year onto my IVA. So hence 6 years. I do not own another house. I live with my now patner and the house is in his name only. I have already completed the PPI claims a couple of years ago which went through my IVA company so all that’s sorted too. So will there be anything else to consider before my IVA will be completed. I’ve heard stories on other forums where people were expecting to complete on year 5,6 and then told they have to continue dies to no equity available or do you think I’ve covered all those loopholes? Thank you for your help.
Sara (Debt Camel) says
If you don’t have a house, you can’t have any equity. I would hope that the variation accepted by your creditors when the secured loan was included is quite clear that your IVA is now 6 years with no need for further extensions (provided you havent missed payments, obviously).
Vicky says
Hello my friend is coming to the end of the IVA and has the ‘release of equity’.
His loan amount was 17,710 and he has paid £16,767.
why do they still want the release the equity when it is nearly paid why can we not just pay the remainder and any fees on top is it apart of the contract he has to do release of equity even if there isn’t a large sum left to pay?
Thanks for your help
Sara (Debt Camel) says
He can’t be asked to pay more than the amount of the debts plus the IVA fees plus (sometimes, it depends on his T&Cs) statutory interest. If the IVA firm has reclaimed any PPI, that will also be added in. he should ask for a calculation showing where he stands.
Vicky says
I am now an authority on his case and try and help him, I am not able to find a % they will charge for fees do you know what this generally will be? They wte giving me a final settlement fee Monday as he did wish to sell his flat but they said the final settlement fee as of 22/11 is £9534.31p the are calculating fees on top and giving me the final Monday I just don’t understand where the £9534 is coming from, I have stepped in to try and help him to stop them taking more then they should as it seems this way and don’t know where to go for advice. Thanks for replying
Nigel says
Hi, my IVA is at the end of the 5 year term, the IVA company (Kingsgate) have past it on to a company called Select Partnership who have told me they have found a possible lender to release equity from my mortgage, which they say we could release 3500 and would have to repay £87 a month over 72 months, this would be separate from our mortgage which is £545 a month, the IVA is in my name only but my mortgage is in joint names with my wife, I owed about 18000, I’ve be paying £175 a month for the last 5 years, the value of the house is about 140000 and we have 76000 left on our mortgage, I was told when I was setting up the IVA it was very unlikely I would be made to remortgage, I thought after 5 possibly 6 years it would finally be over. Please could you offer any advise, thanks.
Sara (Debt Camel) says
Have a look at your IVA terms and conditions. As the article above says, there is usually a “de minimis” clause which says that if the remortgage amount is less than £5000 there is no need to remortgage. Also is there any reference to a secured loan? There usually isn’t unless you have signed some variation?
Tracey says
Hi we are in our 5year. Select
Partnership told us they can get a second loan on the house for 9500 over 20’yrs.
However when i looked at our original terms and conditions we agreed that they may “re-mortgage ”
Or try too and we signed on 2012, in 2014 they added another part to the terms and conditions that they may try and either remortgage or get a second loan on the house .
I explained this to select partnership and they did not even no that the terms were different before 2014.
I refused as we did not sign to say they could try to get s second loan,
This has now gone to the variation board so we can pay an extra year and then finish .
Don’t let select partnership pull the wool over your eyes .
Nigel says
We can not find any thing in our policy to say we have agreed to a second loan when we first started our iva with kings gate (think they are now called church wood financial) but select partnership say that we should pay this second loan they have found for us and have also said our iva will be wiped from our records if we do ,I just want to pay another year if needs be and not take out this second loan .Thank you Tracey for your comment above think it’s time to fight back .
Paul says
Hi i have been asked pay another year. My house value is 162500 and the mortgae is 14000 but they say they have identified iver 5000 equity so i need to continue for 12 months. If my sums are right isee a 2000 deminimis? Do I have the right to ask themto reconsider. Mt uva says ir woul be reviewd on a Loan to Value figure.
Sara (Debt Camel) says
That does look like over 5k equity to be erased if you have the standard 15% to be retained clause. Yes ask for an explanation in writing of this and put in a written formal complaint if it isn’t corrected.
Your last sentence seems mangled and I’m not sure how it should have read.
Adam says
When I first purchased my house in 2008 my mortgage was £180,000 In June my insolvency Practionoer will be requesting a company to look at me potentially remortgaging for the remainder of the debt. The value of my property at the moment is in the region of £190,000 with £155,000 left on my mortgage. Since going into my IVA my wife has had to give up work to look after our disabled children so increasing the mortgage to release equity would be financially difficult and not affordable! Where do I stand ??? (Insolvency company is “debt focus”)
Sara (Debt Camel) says
You are likely to have to make another year of IVA payments. If you feel you can’t make a 6th years of payments because of your changed situation, you could ask the IVA firm if a variation would be possible so your IVA could end after 5 years.
Adam says
Sorry could explain what you mean by variation ?
Sara (Debt Camel) says
A “variation” is where the IVA firm proposes to the creditors that something should be changed in your IVA and they have to vote on whether to accept it or not.
Gill says
Hi
I am already in year 6 of my IVA, because I reduced my monthly repayments when our mortgage provider (Bank of Ireland) increased the interest differential a few years ago. When I agreed to extending the term, I’m sure I was told that I wouldn’t have the equity release clause invoked, as that had to be done in year 5, is this correct?
I have just received a letter saying that it is now time to look at equity release and asking for my latest mortgage statement. We have an interest only mortgage with Bank of Ireland, which the endowment is unlikely to cover at the 25 year point (Amber alert) and also a large secured loan. We really don’t want to be paying out any more for another loan/remortgage.
Sara (Debt Camel) says
This will depend on the wording of your IVA. In a typical IVA the wording says something like “Six months prior to the expiry of the IVA, there should be an attempt to release the debtor’s net worth in the property. The review date would normally be after month 54, unless the IVA has been extended for any reason.” – in this case extending your IVA by a year would then mean that equity release is attempted a year later.
So check your IVA. And also what you were told about the variation when your IVA was extended – see if this mentioned equity release.
Jade says
Yes the offer is from a family member not from money I hold or can release. Can they make me file for bankruptcy?
Sara (Debt Camel) says
There are a lot of broad provisions in an IVA about what can happen if you don’t comply with the agreement. Bankruptcy is one of them. So technically that power is there. But that is meant to be used if your are deliberately refusing to co-operate, say for example if you had received a large redundancy payment and refused to pay it into your IVA.
But it doesn’t sound as though you are in that sort of situation at all – your creditors are being offered MORE because this lump sum will get them your 12 months of extra payments immediately, that is better!
From what you have said you have nothing to worry about.
Julie Wright says
I am 2 months off completing a 5 year IVA my business has folded during this time and the last 15 months has been a real struggle. I have just received a phone call to say I don’t have enough money in my home o o for equity release but my repayments will continue or a further 12 months. I am devastated and won’t be able to continue for a further year. There was no mention , when the agreement was first made, that an extension was a possibility. What can I do ?
Sara (Debt Camel) says
What is your house worth? How large is the mortgage?
Jane says
Hi, I’ve come to the end of my 5 year I.V.A & the company that started the iva passed my details on to a company called Select Partnership to see if they could release equity to pay the rest of the iva off, when they got in touch with me to say they had found a way to get £3,168 I discovered it was a secured loan which I would pay back at £87 over 72 months, I declined this offer because I never agreed to a secured loan, now Vanguard have come back & said because I don’t want to take that offer I would have to extend the life of the IVA by £170 over 19 months, is this right, thanks.
Sara (Debt Camel) says
My first reaction is that this amount is less than the 5k “de minimis” amount which most IVAs refer to. this is a clause which says if the amount of equity to be released is less than 5k, this doesn’t have to happen, and there isn’t an extension of any number of months.
Could you have a look at your IVA documentation and see if this is what yours says?
Jane says
Hi, the IVA is in my name only & the mortgage joint with my wife, the house is valued at 140000 we owe about 76000, a clause says “if that valuation shows that 85% of my interest in the value of the property is less than £5000 then I need contribute no more to the arrangement in respect of the property”. A part says that if I can’t get new mortgage facilities my supervisor will have the discretion to consider accepting alternative proposals including – A third party sum equivalent to the value of my share of equity, a maximum of 12 months contributions beyond 60 months term at the same level as paid in the 5th year.
Sara (Debt Camel) says
OK, so the equity calculation shows that the vaue of the equity you could release os over the 5k point.
I suggest you reply saying you don’t understand where they have got the 19 month figure from as your IVA says an extra 12 months payments in lieu of releasing equity.
What are your fiannces like at the moment? Can you afford an extra year or are you struggling?
Jane says
We have been in touch with our iva company and the 19th month is because they have stated in our policy that they can get a third party sum equivalent to the value of my share of equity ,so because we refused the offer that select partnership found us (secured loan ) of £3,200 the iva company have said we have to now pay this back over 19 months ,we can afford to pay this its just the fact we didn’t ever think it was going to take so long .
Tracy says
Hi sorry if the answer to this is obvious but I would just like to check my own calculations with someone and that I have fully understood the guidance above. I am in the final year of my IVA and going through the equity review stage. My current mortgage is 124,000 and I estimate that my house is worth around 140,000. I am having a valuation later this week. Assuming my estimate is correct, this means that I am mortgaged to 88% of my property value. It would need to be worth 146,000 (unlikely) to come in at 85%. Also taking the 5,000 “de minimis” clause into consideration, my property would need to be valued at aprox. 153,000 (even less likely) for me to be required to apply for further mortgage or indeed to take on an additional 6th year.
Is this correct please?
Sara (Debt Camel) says
Sounds about right to me – I make the 153k figure 152k. Assuming the house is just in your name of course.
Tracy says
Yes it is in my name only. Thanks so much for this quick reply, you have really put my mind at rest. I was originally working on the premis of having more than 5K equity in the property so was a bit worried. This site is excelent, it really lays out the problem well and I’m sure helps many people in this unfortunate situation.
Sara (Debt Camel) says
Hopefully the valuation comes back low and your IVA firm agrees no further payments will be needed.
Tracy says
Hi again
I have now been through my review. My house is worth 140k so there is no requirement for me to remortgage. However, my company’s interpretatoin of
“9.3 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.” is different to mine and from what I understand from this site.
My intepretatoin is as discussed above last month, that it is the defference between 85% of my house value and my mortgagethat is the figure we are looking at, not the 85% of the actual equity.
Their’s is as follows but this doesn’t seem right to me.
“The interest in the property is your equitable interest, your 85% is £13,613.86 which is over the £5,000.00. As I confirmed on my previously email, your current loan to value was over 85% so we would not require you to re-mortgage, however as your equitable interest is over £5,000.00 you would be required to pay either 12 additional payments or a third party sum equivalent to 85% of your interest in the property, which is £13,613.86
Are you able to simplify this language for me or help me with a form of words to take back to them?
Many thanks
Tony hill says
I will be going into my 5th yr iva in June the house is estimated at 100.000 to 105000 it is shared equity of 25% to the builders and outstanding mortgage of 58000 will I have to remortgage or pay an extra 12 month thank you for your help
Sara (Debt Camel) says
Well 100-58-25=17k equity. But your IVA will normally say you should be left with 15% equity which would be 15k, so the amount to release would be £2000 which is less than the de minimis £5000 and there should be no need to remortgage or pay another 12 months
At 105 valuation the figures would be 105-58-26=89=21k equity. 15% eqity would be 15,750 so you would be just over the 5k de minimis figure.
In other words it’s going to depend on the valuation on your house.
Tracy says
Hi Sarah
I’m not sure if you can give me any specific advice for my situation above? I feel i should go back and dispute their interpretation of the clause but am struggling for a form of words to do this. I suppose its the words “net worth net of remortgage costs” that is the clincher here.
Many thanks
Bob says
Hi,
My partner is in an IVA, and I have been given a mortgage in principle for £209k. Our mortgage advisor has said that if she can sign the house over to me, we sell it and the equity will be available in full.
Is that right?
Sara (Debt Camel) says
Your partner has a house in her name only at present with equity in it?
Bob says
Yes. We are mulling over whether or not to sell up, pay off the 22k IVA, and then put the rest towards a deposit. I have been told I have to stump up 15% of any house I want, which limits us to 180k house.
Or we wait a year until her IVA is 5 years old, and hope they don’t request to re-mortgage the house to recoup more money, which they will – which will mean we are no better off.
But my situation may change by then, my mortgage conditions may be different and I may not have to go with 15% deposit.
We were also considering help to buy schemes too.
Sara (Debt Camel) says
“Our mortgage advisor has said that if she can sign the house over to me, we sell it and the equity will be available in full.”
I don’t think your mortgage adviser knows what they are talking about.
a) She most certainly can’t sign her house over to you.
b) If it is sold now, all the equity will have to go towards her debts, not just to paying off the rest of the 22k of her IVA payments. how large are her debts?
c) even if she sells and repays all her debts, the IVA may end but it will still be on her credit record for the rest of the 6 year period. Which will make it almost impossible to get another mortgage during that time.
Bob says
Ok, he comes highly recommended from quite a few of our friends, but I guess our situation may be different.
At this moment I’m not too concerned about my partner getting a mortgage, but I can, so its really all about the deposit we have available through the equity.
I’m not sure what you mean by her debts. She only has the IVA debt, and that is around 22k.
Sara (Debt Camel) says
So there was 22k of debt in her IVA at the start? Sorry, I thought you meant her remaining IVA payments were 22k. How much has she paid in to date?
Vicky says
We have had our iva extended for another year my husband is due a pay out at work of around 13000 would we have to pay some or all of it to the iva thanks
Bob says
Sara,
She would have paid 6k back out of 22k next July. But my partner has just told me that she actually owed 22k in the beginning and this 6k she would have paid is pure fees. Doesn’t sound right to me, when I went into an IVA ten years ago I paid £15k out of £28k back, but I didn’t own a house, but I’m fairly certain that I wasn’t paying 100% fees to some IVA company.
Susan Howard says
Hi I’m in my fifth year of my IVA ..I owe 17,000 . I owe 53,000 on my mortgage but my ex husband owns half …my house is valued at 135,000 so how would this work plz
Sue
Sara (Debt Camel) says
Your half of the equity is worth £41,000. That is such a large amount that it is likely that the important figure for you will not be the 85% test but the fact that you extra remortgage costs can only be a half of your IVA payment.
How much are you currently paying to the IVA?
Susan Howard says
Hi my IVA payment has just gone upto £277 p/Month .