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?
Emma says
Hello, I just wanted to check what the rules are after an IVA has completed and you have the completion certificate. If at this point you decide to sell your house, will your creditors have any claim on that money? Thanks
Sara (Debt Camel) says
No claim at all :)
Your IVA firm will usually have registered a restriction on the house when you started your IVA. They should have taken this off when your IVA completed, see https://debtcamel.co.uk/end-of-iva/. Check that they have – if this hasn’t been done, contact them immediately – you don’t want to find out when you are in the middle of selling the house that they forgot to do this!
Emma says
Thank you Sara!
Conor Wylie says
If my iva is extended from 5 years to 6 years when will the iva drop off my credit report. Meaning after a year off extension 6 years will it take 7 years to drop off my credit report.
Sara (Debt Camel) says
Your IVA will drop after 6 year or when your IVA is completed – whichever is the later. So if a 5 year IVA is extended to 6, it will go as soon as you get your completion certificate, about 3 -6 months after the 6 year point.
Paul says
Hi Sara, We are in the ‘equity release’ period of our ‘interlocking’ IVAs taking it to the seventh year. Is it possible to offer a lump sum through a third party and how likely is it that it will be accepted at this stage? Additionally, would a ‘variation meeting’ be required if an offer was put forward? Thank you.
Sara (Debt Camel) says
Yes it is possible – the sum would normally have to be the total of the remaining payments unless there are reasons why you cannot make these – in which case it would probably be better to ask for your IVA to be ended early. Any less and this would definitely require a variation.
Paul says
Sara, thank you. On the point about the sum being offered, am I right in thinking that it is difficult to predict what the creditors might accept as there is no hard and fast rule? I have heard that a ‘good’ offer is as equally possible in being accepted as a ‘poor’ one. Does it depend on your specific circumstances, financial or otherwise, and the rationale you put forward? Thank you.
Sara (Debt Camel) says
There is no rule and there is a certain random element but I wouldn’t say that it is equally likely that any offer will be accepted!
A “good” offer is one that is either pretty much the full amount you will repay or if it is less, one that is backed up with evidence that you can’t carry on with the repayments.
In your situation where there isn’t much time left, the creditors are unlikely to agree a low offer unless there is a good reason why they should.
tom says
Hi Can you help me please
I am currently coming to the end of my 5yr sole IVA and it’s stressing me out I may have to remortgage!
My month payment is £150
My house is worth £160,000
25% is owed by a housing association which was £32500 they also take 25% of the profit which would be £7500
my redemption figure is £92,342
Also as the mortgage is in me and my wife’s name – would the calculation of the equity be split for just my half?
Sara (Debt Camel) says
OK so the HA owns £40k, so you and your wife own £120k. Less the mortgage is just under 28k. So you half (your wife’s share can’t be touched ) is just under 14k.
You would have to be left with 15% of the equity. That would be 15% of 60k = 9k. That leaves just under 5k that you could be asked to release… which is what the de minimis figure is… So I don’t *think* you should be asked to release any equity. But it’s all very touch and go – how sure are you about the 160k valuation?
Turner says
At the end of a 5 yr IVA NOW ASKING FOR A REMORTGAGE VALUATION HOUSE WORTH 135.000 PAID 85.000 HOW MUCH WOULD IVA TAKE FROM ME
Sara (Debt Camel) says
Is this house in your name only?
How large are your monthly repayments?
Is your mortgage repayment or interest only? How long until it finished? How old are you? What is your current financial position?
Brian Cizakowsky says
I’m in my 5th year and doing an equity review. House is valued at 124000 and mortgage is 66000 owing. I’m 62 and have been asked to try to get 2 attempts for a mortgage of 40000. How can they envisage me getting a mortgage at my age.
Sara (Debt Camel) says
It’s a formality. When you can’t, you will have to make an extra year of monthly payments. Will that be a problem for you?
Brian Cizakowsky says
No I think we will manage another year. Its just the ridiculous situation of applying to 2 mortgage lenders. Thanks for your advice
Val says
My husband and I stopped paying our IVA just over 1.1/2 years ago after paying for 5 years, but my IVA company are now saying that one of the creditors wants a share of the equity in our house now. We are selling our house for £133,000 and we have a secured loan for £48,000.00 and have recently paid off our mortgage because my husband had to retire due to ill health and the money he received paid for this.
There is a restriction on our documents because of the IVA and I would like to know how much equity they would expect us to pay as the new property we are in the process of buying is £87,500.00 and we still have the secured loan which will be ongoing for another 8 years. We are not in a position to remortgage as we are both in our sixties me being 67 and still working and have no savings.
Sara (Debt Camel) says
What happened when you stopped paying, did your IVA fail? When you sell your house, the secured loan will be repaid.
Val says
We stopped paying after 5 years we had a statement from the IVA company and our monthly payments ceased. this was 1.1/2 years ago. We were told 6 months after we had finished that one of the creditors wanted us to release some equity to pay them so we tried to remortgage but couldn’t at the time then after informing the IVA company we stopped having any further emails/letters or telephone calls. Last month they contacted me again asking to speak to us about our equity but because my husband is not very well I couldn’t speak to them we are subsequently in the process of selling our property for £133,000.00 but there is a secured loan of £48,000.00 which we have been paying back religiously for over 10 years. The new house is costing us £87,500.00 which we would pay from the proceeds of the sale as we couldn’t get a mortgage at our age and the rest would go towards paying off the secured loan. The only thing is the IVA are recorded on documents that need to be signed on completion of the sale and I just want to know how much equity the creditor expects to get from us.
Sara (Debt Camel) says
If the house is sold before your IVA is ended the IVA firm will expect the debts in the IVA to be repaid in full and also the IVA fees.
You could consider not selling your house until your IVA has been completed and the restriction on the house has been ended. See https://debtcamel.co.uk/iva-sell-house/.
Val says
We are having to sell the house because my husband has a serious heart condition and the house is too big and we need to downsize to a smaller house which has disabled facilities. The house we are going to buy has all this as well as a stairlift and disabled bathroom and downstairs toilet. We would need the money from the sale of the house to buy this property and the difference between the price of the new house and the sale price would go to pay for fees and pay our outstanding loan off. Can I contact the IVA people and explain the situation to them and ask if I can repay a certain amount monthly until such time as I can give up work to pay off the equity. There is only one creditor who is asking for this all the other creditors were okay and finished.
Sara (Debt Camel) says
Well, you can try – ask for a variation to end your IVA immediately “on a funds paid to date” basis. And provide some medical evidence about your husband’s condition. It is a shame you didn’t push the matter of getting your IVA closed earlier. It wouldn’t be possible to just pay one creditor, they will all have to be treated equally.
Val says
thank you for getting back to me I will email the IVA company and ask if I can get a variation to end our IVA immediately on a funds paid to date basis and I will provide them with medical evidence that my husband has had to retire from work because of ill health. My husband and I were unaware that we could have pushed the matter earlier because nobody informed us of this when we didn’t hear anything from them we assumed that after 5 years everything was finished.
Adam says
My house is valuing at roughly £180,000 with a mortgage of £146,000 my monthly Iva payment is £315 How much could they make me remortgage for ?
Sara (Debt Camel) says
I am assuming the house is only in your name.
You have 180-146 = 34k of equity. You would have to be left with 15% of the house value as equity, ie 27k. So you need to ask for a mortgage of £153k, 7k more than your current mortgage.
But it is much more likely you can’t get a remortgage and will just have to make another year of IVA payments.
a swain says
Hi Sarah.
just to clarify your point to Adam, does the Iva have to leave you with 15% of the house value or 15% of the equity you have in it?
Sara (Debt Camel) says
It depends on the wording of your IVA, but the industry standard is 15% of the house value.
Joel says
Hello,
I had to agree with an extra year to take the iva which takes it up to 72 month’s. New the years they will ask me to release the equity in my home.
The current house price is £79k and my remaining balance is £55k. I have no idea how to work it out and what amount they want.
Can you please help me.
Sara (Debt Camel) says
So the equity in your house is 79-55 = 24k. And you have to be left with 15% of the house value as equity which is a bit under 12k. So you would have to ask for a remortgage of an extra 12k ie 67k. Ask your IVA firm to confirm these figures.
But it is much more likely you can’t get a remortgage and will just have to make another year of IVA payments.
Joel says
Hi Sara, thank you.
The iva is joint or interlinked as I now understand with my wife. Does this change the amount of equity we can keep.
Last question, my iva is from 2012 and I agreed to 72 months. Due to the remortgage possibly failing can they ask me to go to 84 months.
Thanks Joel
Sara (Debt Camel) says
That doesn’t change the calculation in your case. You can each keep 15% of your half of the equity… so 12k each, adding up to the same 24k.
You are asking for a remortgage of 12k. This is more than the 5k minimum amount for each of you, so that doesn’t change.
Yes it’s likely your IVA will now run for 7 years. This should have been explained to you when you set it up.
Joel Tapner says
Hi sorry for the late reply.
This April my iva will ask me to try and remortgage. I am aware of the extra year. But will this be from the day of trying to remortgage or at the 12 month review?
Sara (Debt Camel) says
A 12 month extension if you can’t remortgage will start at the end of your IVA.
Valmai Redden says
Our house is valued at £133,000.00 how much equity would we have to release if we have a loan of £48,000.00. We both have an IVA.
Sara (Debt Camel) says
You have equity at the moment of 85k. After remortgaging you have to be left with 15% of the house value, ie 20k. So you would need to remortgage for an extra 65k, ie a new mortgage of 113k.
Valmai Redden says
we won’t be able to remortgage at our age as we are both in our sixties. How much therefore can the IVA company want from us
Sara (Debt Camel) says
In that case, you will probably have to make an extra year of IVA payments. Talk to your IVA firm!
Kathryn Bishop says
Hi
Help! Been paying into our IVA for nearly 72 months. Just been told we’ve got to remortgage. Problem is we have a lot of equity, and our mortgage term is only for another 3 years (due to pay if off in July 2020). Current IVA payment of £575. How much can they make me remortgage for and can they make me increase the term of my current mortgage? I fear for my husbands health if they drastically increase our mortgage term.
Thanks
Kathryn
Sara (Debt Camel) says
Your remortgage can’t cost more than your current mortgage plus half of the monthly IVA payment you have been making. They can usually ask you to remortgage until the end of your mortgage term or state pension age, whichever is later.
If your husband is in poor health, this may mean he won’t be offered a mortgage…
Kathryn Bishop says
Ok thanks. How much would we be expected to pay in to pay off the Iva? It was sold to us on the basis of writing off up to 85% of your debt, but surely if you have to pay into an Iva with a lump sum, I will end up virtually paying off all my original debt? I feel I’ve been conned and with us being lucky in having significant equity, if they make us increase the current term of our mortgage then we are in a worse situation than before we took out the Iva.
Sara (Debt Camel) says
I’m afraid the “maximum” you could pay in is the total of your debts plus the IVA fees plus possibly 8% interest on the debts :(
The equity release should have been explained to you when you started the IVA :(
Rich says
Hi, I was pretty much unaware of this equity release clause – IP just said don’t worry about it, you wont get a remortgage…
I’ve just been asked for valuation etc., in month 58 of 60 month IVA. It has been extended by 6 months for agreed missed payments, extra earnings, PPI claim.
I owed £30k, and after 66 payments, and deducting fees, will still owe £8k.
I think I will have plenty of equity in my house. Around £40k. I’m 47 and my mortgage/secured loan finish in 5 years.
Two questions:
1: How much will they want? Not sure how to work out simple interest on the debt? Is it 8% pa on the £30k debt is it on the reduced amount still owing each year?
2: If I cannot remortgage, will I have to extend the IVA by 12 months from month 60 – the original term – or month 66, the already extended repayments?
Many thanks,
Rich..
Sara (Debt Camel) says
You have to be left with 15% of the equity in your house. Also your increased mortgage payments can’t be more than 50% of what you are paying each month to your IVA.
1. You need to ask your IVA firm for this. The PPI also has to be taken into account, but after the claims firms & IVA firms fees have been deducted. The 8% (if that is included in your IVA? In some it isn’t) will be on what is owed after your IVA firm has made distributions and taken its own fees, you probably can’t guess accurately when those were made.
2. 12 months after your last IVA payment, so after month 66 in your case.
Maz says
Coming to the end of Iva and now looking at equity release, I wish I had read the small print. It’s a joint Iva and joint mortgage with secured loan totalling about 230,000. Think the value of house is around 270,000 but we have only paid interest only on the mortgage. Is equity release possible for us? .
Sara (Debt Camel) says
If your figures for the house value and mortgage are correct, then there is just less than 15% equity in the house. If they are a wrong by a small amount, the “no remortgage for an amount £5k each” rule may apply. So no, you shouldn’t have to remortgage. Nor should you have to pay an extra years contributions. CHeck those figures!
Ali Joolia says
Hi,
We are in an IVA, the valuation of out house is 250000 and our redemption statement says 135600 remaining on our mortgage. We are currently being offered a sum of money by a friend to make a full and final payment, however our ip have asked for equity release. Can you work out some figures and tell me in the current market would we be able to remortgage. We are currently in the 4th year of IVA.
Sara (Debt Camel) says
Have you put the figures into the calculator above?
adele says
Hi I’ve agreed to pay the 12 months extension on my Iva and have 10 months left to pay I’ve just put the figures in the equity release calculator and it’s says less than 5.000 no remortgage is this right?
Sara (Debt Camel) says
It would have been better to have checked this with your IVA firm before agreeing to the extra 12 months. But you could phone them up and ask…
adele says
So does it mean I needn’t have agreed to the 12 months extension because I have less than 5,000 to release?
Sara (Debt Camel) says
probably … it does depend on the wording of your IVA. Talk to your IVA firm about this and ask why you were not told about this. Consider putting in a complaint if the IVA firm can’t explain why you had to pay for another year.
a swain says
Hi, I have just been sent a letter saying that I am coming up to the equity release stage of my IVA.
Having looked at my original IVA proposal I have a few question which I hope someone can answer.
1 – the proposal gives a clear figure of £6815 in regard to Equity release, can they change this figure as my equity has increased since that time or can I insist that this figure is all I have to attempt to remortgage for?
2 – there is no mention of secured loans, only remortgage, does this mean I can refuse a secured loan?
3 – whilst I know that I may not be allowed to insist on my current mortgage provider, do I have to approach whoever they say? or can I insist on applying to lenders of my choosing? also how many refusals will I be expected to obtain?
4 – will I be expected to extend my mortgage term beyond its current end date?
many thanks in advance
Sara (Debt Camel) says
1. It may depend on the wording of your IVA but that is normally just an estimate, not an actual figure which is normally determined in your last year.
2. yes (unless you have agreed to a variation?)- has the letter mentioned a secured loan?
3. normally you can approach who you want and a couple is enough. But you do need to co=operate with your IVA firm here.
4. See what your IVA proposal says – typically you can be asked to remortgage to the later of your current term or your state pension age.
A swain says
Thankyou,
I have been over my proposal in detail and nowhere does it say that the figure is subject to further review , it just goes on to give maximum limits of equity release etc but does clearly state this £6k figure as the amount of equity to be realised . Just wondered if you’ve ever heard of anyone arguing this point before, o could you point me in the direction of anyone who could take a look at my proposal in detail and advise on the legality ?
Many thanks again .
Sara (Debt Camel) says
You can go to your local Citizens Advice, they can ask the national Expert Advice team if they don’t feel qualified. Or you could look for a local law Centre. Either of those routes would be free. A solicitor who specialises in personal insolvency would charge, I can suggest one if you want.
BUT what point are you at at the moment? Has your IVA firm either suggested a secured loan or found someone that will give you a remortgage? If they haven’t, then the odds are very good that you are just going to have to pay another years IVA payments, regardless of whether the equity release should b e6k or 60k.
A swain says
I am just at the valuation point right now but they have hinted in the past that they would suggest “partners” that they work with to secure remortgages. Obviously I am not keen to go down that route as I’ll wind up with a high interest rate for a very long period of time and wind up ultimately paying out far more than my current debt value not to mention be at the mercy of possible rate rises . I will take some advice on the wording of the proposal as i would like to dig my heels in on this £6k figure but if it comes to remortgage I just need to know how much right I have to avoid their suggestions on lenders , the two banks I intent to approach certainly wouldn’t offer additional borrowing.
Dave powell says
Hi my wife and I are in the final year of our iva . We’ve never missed a payment but it’s a struggle as we are both on the basic pension with pension credit. We currently have a mortgage on our house . As it is a cornish style property with a design fault I’m very doubtful we could remortgage or get equity release. I’m really worried they are going to extend our iva for another year . I feel absolutely gutted about this as our quality of life isnt good can’t afford to use central heating etc as money is so tight. Can you please advise me . Dave
Sara (Debt Camel) says
I can’t imagine you can remortgage in that situation. If you feel you can’t afford another year of payments, ask your IVA firm to review your expenditure and income – they can propose a variation to your creditors that your IVA is closed without the extra year if it isn’t affordable for you.
Dee L says
Hi – this may seem like such a silly question!
I’m at the Equity Release stage of the IVA – the house has been valued and there is equity that can be released (I understand only my equity can be released and not my husbands)
The IVA is in my name only, but the Mortgage is in joint names. When I apply for a re-mortgage, as the current mortgage is in joint names I have to put both of our names on the application, don’t I? .. (t’s one of the questions where I know the answer, but I’m just thinking about it wayyy too much!!) Sorry for sounding silly!
Sara (Debt Camel) says
Yes, a joint mortgage application.
Dee L says
Thank you, Sara! I thought that was the case :)
My IVA company has emailed me and said my half of equity is £29,353. They said I might not be able to get this amount but to get the highest amount I can as long as I can afford the repayments.
I thought we/I had to try and re-mortgage for the available equity amount, and not less? If we get refused the re-mortgage for the equity amount do I then try and have to try and re-mortgage again for a lower amount ?? I’m a bit confused!
A swain says
I am in the exact same position as you pretty much £ for £ at the moment so would be interested in an answer on this to . One question though did your original proposal state an actual figure to be released at the end of the Iva ? If so have you questioned why this has changed since then? Because I have a figure and can’t see anywhere that it’s subject to change .
Dee L says
Hi! No, I wasn’t given a equity figure to be released at the end – I’m wondering though, how could they give you a figure to start with if they didn’t know what the value of your house or remainder of your mortgage was going to be in the 5th year?
Unless the figure was an estimate based on the figures they had at the time, and now you’ve sent them your mortgage statement and valued your house (I’m guessing) then it’s changed the figure?..
This is all guess work mind, I’m sure Sara might be able to help!
Bobby says
Hi Sara i am coming to the end of my iva and now have to release equity in my property – I have a figure of £17k stated in my original iva document will this change? Thanks in advance
Sara (Debt Camel) says
Almost certainly. It would be unusual for a fixed number to be in your IVA document – it will depend on the current value of your house. Use the calculator above.
Bobby says
Thanks Sara that’s pretty much what I thought but I will still take some legal advice on it.
Looking through the document there is no mention of the number being subject to change so it has to be worth looking into?
Th IP is also mentioned the possibility of me having to take out a loan if I can’t remortgage but this too is not in the original plan so I intend to challenge this when they contact me this week
This is the correct thing to do Right?
Sara (Debt Camel) says
Legal advice – well that could be expensive. Was your IVA under the Standard Protocol? You could go to your local Citizens Advice or a Law Centre. If you want to pay a solicitor it should be one who is familiar with personal insolvency.
But the more urgent task is to challenge the assertion that you may have to take a secured loan. Because it’s very unlikely you will be offered a mortgage of any size… So if you don’t have to get a secured loan (and you shouldn’t if that isn’t mentioned in the T&Cs) then it doesn’t much matter how much equity you have to release as you aren’t going to be able to… Have you read the two links in the article above in the section on secured loans?
bobby says
Hi Sara,
thanks for the reply,
I have heard back from the IP who are now looking for me to “re-mortgage” for £1354/cm over 10 years totalling £163k with the interest being £40k? (variable interest rate of 5.91%) how can they expect me to pay this? if the interest rate increases Ill be back where I started – I just cannot take this risk.
My IVA was for £82k of which the original figures (taken from this years annual report) were
Estimated Contribution – £41,700 ( paid £33,708)
Estimated Equity – £16,694 – which is also stated in the original arrangement summary “offer of payment” section.
Total figure = 58,394
I have 8 years left on my current mortgage and thought that by then I would be totally debt free
can you please advise as I am now getting really nervous and starting to worry
thanks in advance
Sara (Debt Camel) says
what is your current mortgage payment? how much are you paying to the IVA each month?
What is your house worth? I assume this is just in your name? how large is your mortgage? is there any early repayment penalty?
Bobby says
Hi Sara
Our mortgage is for £88k and we pay £877/cm
The IVA is joint and we currently pay £1013/cm
A swain says
I’ve got a figure in mine to , there is no mention anywhere that this will be subject to change so I’m going to take some legal advice to see if this is something I can insist upon .
jim says
Is the figure for the amount of equity you have to pay in the body of your proposal, or just in the schedule of estimated outcomes? I have seen older proposals which stated a specific amount but it is very unusual these days.
A swain says
Hi Jim .
The figure is set out in the main proposal along side the figure that will be paid by my monthly contribution, these figures are then combined to show a nett contribution which forms the overall proposal .
jim says
Sounds pretty clear but, without seeing the wording, it’s not possible to be 100% certain. Has your supervisor said anything about the amount that you have to release, or are they really just talking about how you’re going to raise that amount?
Rich says
Hi, I am unable to remortgage and my provider has suggested 12 months at the usual monthly payment to end the IVA. They say I am now able to work overtime etc., without this having to be paid into the IVA – is this correct?
They also suggest as my I&E review shows I’m struggling, they can call a creditor meeting but creditors may wish to extend payments but at a lower rate. Can this add up to more than the value of my current payments? I.e. Could they suggest 24x payments at 50% – or could the total be higher than current 12x 100% payments?
Will the cost of the creditor meeting be added to my payments?
Many thanks… Rich..
Sara (Debt Camel) says
“They say I am now able to work overtime etc., without this having to be paid into the IVA – is this correct?” This is common. The extra year is usually a year of fixed payments, not just another IVA year. If they have put this in writing, then you should feel confident about this.
“my I&E review shows I’m struggling” are you at the moment? is anything coming up in the next year that will make your situation worse? It sounds as though the IVA firm is suggesting that your IVA should be ended now without an extra year of payments – that is a pretty normal thing to happen if you are struggling.
“Can this add up to more than the value of my current payments? I.e. Could they suggest 24x payments at 50% – or could the total be higher than current 12x 100% payments?” It shouldn’t be more than the 12 x current payment total.
“Will the cost of the creditor meeting be added to my payments?” No, it is a fee for your IVA which comes out of what the creditors get. You only end up paying this in the unusual situation that you end your IVA by paying your debts plus fees in full – eg if you have inherited money.
Rich says
Thanks very much for your helpful reply Sara :-)
Laura says
Hi Sara,
I have a jointly owned property with my partner and am looking at going into an IVA. My partner doesn’t know about this. Is there any way of getting round the equity clause without my partner knowing?
Sara (Debt Camel) says
No. An RX1 Land registry form will have to be completed and signed by both property owners.
Even if it wasn’t for this property you would be very badly advised to not tell your partner about your IVA. What if you were made redundant or inherited some money or got a good bonus – you would have to explain to your partner why this money was being paid into your IVA not coming to you. What if your partner wanted to remortgage or move houses – you would have to explain this is impossible because the IVA will wreck your credit rating.
Vicky says
We are in our 6th year of the iva because we couldn’t remortgage our last payment is due to go out on the 30th December 2017 but today I have received a letter off our iva company that says notice to creditors under the standard conditions for iva extension notice and it says that they are giving notice that the duration of the iva is been extended for a period of 6 months to enable the supervisor to finalise the administration of the arrangement I was just wondering if nobody knows what that means and is our iva been extended for another 6 months after December
Tom says
Hi I have come to the end of my Sole IVA, there was enough equity in my property but as I have spilt from my partner and no longer living at the address I could not be asked to remortgage. My IVA firm have asked me to carry on paying for 1 year is this normal procedure? As I was just a little concerned because in the letter its stated ‘I will use my discretion to consider 12 additional payments’?
Any help advice appreciated
Thanks
Sara (Debt Camel) says
It sounds normal, but (a) how much equity is there in the property (property price & mortgage value)? And (b) can you actually afford another year’s payments?
Tom says
They are stating that I have £70,000 equity that I could release ‘ not too sure how they got that! I Think they’ve over estimated I think it’s more like 20,000. I can’t really afford it as I’m still paying mortgage and bills plus I have to
Pay rent where I’m currently staying. I have 3 children all under the age of 18. Is there a possibility that I could refuse to pay an extra year?
Sara (Debt Camel) says
How much is the house worth?
Tom says
They’ve valued it at £202,000.
The IVA is in my name only, I would say the valuation would be £175,000 tops, we have a mortgage of £90,000 joint names, 25% is owned by a housing association in which they take 25% of the house value when sold.
Sara (Debt Camel) says
Ok that supports your argument that you only have c 20k of equity. That would still be enough to ask you to pay an extra year though.
I suggest you write to your IVA company and say that you would like a review of your situation as you don’t think you can afford to make another year of payments. Ask if your IVA can be varied so that it is completed on the basis of funds paid to date – your creditors will have to approve this. Also point out that your equity is massively less than they have suggested as they have overvalued the house and they haven’t allowed for the housing association having a 25% share.
Tom says
Ok thanks will do. Thanks for the advice
MC says
Hi, I completed my IVA payments in January 2016. I never recieved a certificate etc. but the IVA company stopped taking payments and conformed we had completed the IVA.
Now after 20 months they have contacted me to say I am in breach of payments and due to there being equity in our home they want anoyher 12 months or we need to remortgage.
I know this was part of the agreement BUT is it acceptable to not heat anything for almost 2 years and naturally I assumed the agreement was complete.
Since it ended I have rearranged my finances which i am now managing well…however this curve ball will but me under massive financial difficulty which is a bit ironic considering they were meant to help.
Sara (Debt Camel) says
Well it doesn’t s a shame you didn’t make sure your IVA had ended properly at the time… but no, this isn’t acceptable. It is very poor administration by the IVA firm. Who is it?
If you now can’t afford another year of payments, you need to tell your IVA firm and ask for a variation of your agreement so it is completed on the basis of funds paid to date.
Dom says
Hi, I am 8-9 months away from the 5 year IVA Term which commenced March 2013. My original debt was £35k and I am up to date with payments which have been £256 per month. My IVA company have now referred me to a 3rd Party (The Select Partnership) in order to see if I can release equity from my property.
After I have provided the necessary information Select are suggesting I take a £12k loan (or mortgage top up – is not clear) to close my IVA.
The interest rate is 11.9% over 23 years (yes 23!), £128 per month so meaning for a £12k loan I would need to repay in total a whopping £35k over the term!
This is of course if I take the loan to term but still it seems extremely unfair with all the future uncertainties of job, health etc….
In addition my terms say nothing of a 3rd party involvement. My terms state ‘I [myself] will obtain 2 mortgage quotations from reputable brokers and/or mortgage lenders. If my supervisor is satisfied that one of these quotations demonstrates that I am seeking to re-mortgage for the maximum achievable then I will accept and proceed with a re-mortgage in line with the higher of these quotations.’
Any advice and help gratefully received.
Sara (Debt Camel) says
This would be a secured loan – a “mortgage top up” would have to come from your current lender. I suggest you reply saying there is nothing in your terms that means you have to take out a secured loan.
Do you agree with their calculation of 12k equity to be released?
Are there any good reasons why you can’t afford to pay anymore after your 5 years ends?
Dom says
I would probably agree with their figure of £10k (£2k is fees), even though i think they are vastly overestimating the value of my house, them having never seen it.
I can afford to continue paying the current amount per month, but would object to the effective continuation of this debt for another 23 years! This was never made clear at the start.
Chris says
Hi
Coming too the end off a 6 year iva the house is worth around £165000 and we owe 153000 roughly on the mortgage, it is a joint iva would we need to make a extra 12 months payments ?
Sara (Debt Camel) says
You have less than 15% equity, with most IVAs you shouldn’t have to try to release equity or make any more payments
Lisa says
Hi Sara, I am really confused!!! The house is in joint names and current value is £120K. I am the only one with an IVA. The remaining mortgage is 72967. I have NO idea of what amount I am supposed to apply for and im really stressed! Can you help?
Thank you
Sara (Debt Camel) says
If you put the numbers into the calculator in the article above, you will get a figure. If you aren’t sure, then I suggest you check with your IVA firm that this is the amount you need to ask for a remortgage for.
Lisa Evans says
HI
I am in the final year of my IVA, my house is valued at £155,000 my outstanding mortgage including redemption is £126000, it is a joint mortgage and we both have IVAS, would I be expected to remortgage or pay an extra 12 month payments
Thanks
Lisa
Sara (Debt Camel) says
have you put the figures into the calculator in the article?
Lisa Evans says
Yes I have and it states no, is this correct ?
Lisa Evans says
I cannot find the calculator now, please could you send me the link to double check
Also, if you both have IVAs is the allowance £10,000?
could you please explain the calculation also
Thanks
Lisa
Sara (Debt Camel) says
The calculator is in the article above these comments.
The article explains the normal calculations for joint IVAs ie you each have a 5k allowance. But it depends how your IVA is worded, have you talked to your IVA firm?
Lisa Evans says
Hi I have spoken to MY IVA and they have confirmed £10,000 allowance
Thanks
Sara (Debt Camel) says
good! In that case you shouldn’t have to remortgage or pay an extra year.
Alan says
Hi we’re in our last Iva year our property is valued at 350000 and are paying £327 per month and owe 140000 on mortgage how do we go about releasing equity
Sara (Debt Camel) says
You can use the calculator in the post above to see the maximum amount you could be asked to remortgage for, but in your case the important factor is that your mortgage costs can’t go up by more than half your IVA payment, so £164 a month.
Your IVA company should tell you what they want you to do eg go to your current lender and another lender and ask for a remortgage, then send the rejection letters to the IVA firm.
Alan says
Thanks for your very quick reply you have put my mind at ease thanks again
Louise Shah says
We are nearing the end of our 5 year joint IVA and will shortly be asked to remortgage . Do most people get rejected for a remortgage?
Sara (Debt Camel) says
Yes!
Aimee says
Hi I am just about to undertake an Iva however am stressing about the equity release clause. Due to my very very poor credit rating I am not on the mortgage at all it is just my husband. We are living miles from family so would be looking to move closer to them but in a house in the same price bracket as the one we are in. Two questions would the move be possible and with the house not being in my name would they still expect me remortgage or would they go for the additional year? I need this to help me get debt free but I don’t want to be this far away from family for another 6 years
Sara (Debt Camel) says
As you don’t own your house, you can’t be asked to remortgage or pay an extra year. And there shouldn’t be a problem if your house is sold and your partner buys a new one.
However moving is a big change, presumably you and partner will both need new jobs etc. It could be quite easy for your family to be left £100 a month worse off by the move and my concern is that this could mean any IVA you agree to now isn’t affordable then so it may fail. It may be better to wait and go for an IVA after you have moved.
Aimee says
The move wouldn’t mean any change of job as my husband can transfer and I would still commute as I do now as it’s the same distance from us and where our family is. We would be looking for the same price range so no change in the monthly mortgage. It was more that I didn’t want to risk having to mortgage the house or setback a move based on my debts
Sara (Debt Camel) says
Well it’s your choice. My advice is not to start an IVA until you have moved.
EDIT – I have now written an article on a similar situation: https://debtcamel.co.uk/iva-move-house/
Vicky says
Hi there. I have joint mortgage £138k outstanding. Property valued at £167k only I have iva. My iva company have all the documents and have wrote to me to say I have more than £5k equity but as I have an iva and likely not to get a remortgage I have to pay for another year. I have done the maths based on their website guidance on how they work it out, I have come to £1975 so under £5k am I missing something or calculating it wrong?
Thanks in advance
Sara (Debt Camel) says
who is the IVA firm? Have you asked them to explain how they calculate you have over 5k equity that can be released?
Joanne says
Hi I’m having to sell my house due to my mortgage coming to end of term
My mortgage is 135000 and it’s joint with my mother… She put 10k in originally as part of her deposit…. We may may get 155000 for the house… However after fees etc we will get back 14500 will my mum still get her 10k back as the iva is in my name? And she has nothing to do with it?
Sara (Debt Camel) says
You started an IVA when you knew your mortgage was going to end during the IVA? What was agreed at the start about this?
Michael Anthonisz says
Hello
My wife and I took an IVA (each) in September 2012. During the first 3 years we had to take a payment holiday due to moving from an interest only mortgage deal to a repayment one (we had reached the end of our interest only option). So now we are in the final month of the original 5 year IVA. we currently pay £642 and have met all payments. Our house has been valued at £290,000 and we have outstanding mortgage of £228,000 (joint Mortgage). The mortgage has 13 years to run, which will take my wife up to 65 (although not me). We have looked to release equity in the property – but cannot get anyone to lend at more than 75% LTV, so an equity release is not looking likely. Having spoken to our IP we have been told that we will have to sell our home. I thought the point of the IVA was to avoid this situation. I have raised the 12 month extension, and been told that it is not guaranteed (due to the payment holiday) and that we will need to remortgage at the end of the extension anyway. I though thais we had to extend for 12 months the remaining debt would be written off. Am i incorrect in this? Please advise. Thankyou.
Sara (Debt Camel) says
It is possible to set up an IVA so that the house has to be sold but this would be very unusual. A payment holiday wouldn’t normally make a difference, it just pushes everything make a few months. Have you read your IVA contract in detail?
Michael says
Yes i have read through the application, modifications etc. the only reference i can find is basically the standard text on attempt to release equity or pay ’12 additional monthly contributions (with the aggregate sum paid to the supervisor being limited to 85% of the value of the debtor’s interest in the property)’. Does this mean that if i extend by 12 months t will nee dto remortgage after the 12 months are up? or I would still need to pay back the outstanding debt? My Ip stated that ‘nothing is written off in an IVA’ – surely this can’t be correct?
Sara (Debt Camel) says
” Does this mean that if I extend by 12 months I will need to remortgage after the 12 months are up?” no. the 12 months additional contributions are instead of releasing equity.
I suggest you ask your IP to explain in writing why you need to sell the house and why you cannot just pay an additional 12 months contributions.
Tony says
Hello
A person of 63yrs owns a house in their name with a value of £295,000
A mortgage of: £112,000
Mortgage payments: £c1325pm
IVA repayments of £535 (based on outdated income figure that has is now 50% less than before)
IVA of a 6 Year Term
Outstanding IVA @ yr 5 £188,000
1/ Is an equity release on the property viable and would the entire amount of equity released be able to be claimed upon by creditors?
2/ If an equity release was done and the mortgage paid off would the IVA be able to be continued to termination?
3/ Would than bank want/require that the entire mortgage be paid off from any equity release, or is it a persons perogative unto how and over how long it is paid?
Many thanks.
Sara (Debt Camel) says
Your mortgage is interest only? If your income has halved, how are you making the IVA payments? Your IVA was originally 6 years long?
maureen says
Hi I am in the 5th year of my IVA and have been approached by a company called “The Select Partnership” with review to releasing equity in my property to pay the balance of my IVA. I have been informed by this company that I have to accept their proposals and that I am not allowed to apply to mortgage companies independently for a re mortgage, is this correct? Also I stated to them that I doubted I could obtain a re mortgage as I have only been paying the interest on mymortgage since I have been paying my IVA as I could not afford both, they then said that they would apply for a re mortgage on my behalf a year after the IVA had finished as then there was a better chance for it to be accepted, how does that work if the company I have the IVA with have already stated that if I cannot obtain a re mortgage then my IVA would be extended for a further year if I couldn’t obtain a re mortgage?? Can you advise please?
Sara (Debt Camel) says
“I have been informed by this company that I have to accept their proposals and that I am not allowed to apply to mortgage companies independently for a re mortgage, is this correct?” No, you can apply to whoever you want for a remortgage. No one is likely to give it to you though…
My guess is SP are proposing a secured loan now, at an unpleasantly high rate of interest? Do you have the details of this? Also who is your IVA with?
Steve says
Hi Sara is it possible while in a iva we are in a joint iva with a repayment mortgage house value of 80000 current balance of 42377 we are 36 months in the iva paying 202 amth and we’re after offering my wife’s pension drawdown to offer a full and final but got told the creditors would be looking at 10k and was wondering if it would be better to use up equity in house due to my health not getting any better and do not want to be in the iva for at least another 3years I am 58 and my wife turns 55 end of March 2018 thanks steve
Sara (Debt Camel) says
I am not sure why you should have to offer 10k if you use your wife’s pension to drawdown. From what you have said there should only be 36 times £202 – which is c £7250. Has your IVA firm (who is it?) explained why they would want 10k?
It is your right to ask for any proposal to be put to your creditors, so unless the IVA firms comes up with a sensible reason, you could ask for this.
If there is a good reason for the 10k, then I would have thought that would apply if you were releasing equity too. Also you are likely to find it very expensive to release equity as you have an iVA on your credit record.
Alan says
Just a bit of insight from someone who has just completed an iva, I wasn’t even asked to remortgage by my ip. They just made an assumption that because I was in an iva I wouldn’t get any further borrowing and I got 12 months extra payments instead. I had a lot of equity in my property too. So just saying don’t worry about this issue too much unless you have a secured loan clause. Mine didn’t . Now I’m free and clear of all debt so hang in there it does work in the end.
Mark says
Hi, I am looking at going in to an iva, it will be a sole Iva but I own a property with my wife. We currently have joint equity of around 90k but after 5 years that figure will be closer to 210k assuming average house price increases. I owe around 100k my fear is I go through an iva for 5 years and then have to remortgage 85k (85%) of my equity in 5 years. Would the remortgage have to be based on not paying a monthly payment at more than 50% of the monthly iva figure? Lastly if my income was to drop meaning I cannot remortgage would I simply pay for the extra 12
Months?
Sara (Debt Camel) says
sorry a few questions- what do you think your IVA repayments would be each month? 100k is a lot of debt, do you have one or two very large creditors in it? is your income variable? have you tried reclaiming any PPI?
Peter says
Hi am coming to the end of my Iva of 6 years am now told that I have to give up equity in my home the house is a joint owner me and my wife who is not in the Iva it is valued at 159000 and I have a mortgage left of 97000 they also say if the equity is not worth it I will have to do another year as Iva so that would be 7 years is that correct
Sara (Debt Camel) says
You could check your IVA terms but that sounds pretty normal? Was this not explained to you at the start?
Peter says
Hi
Not that I remember.
So in regards to the remortgage my present mortgage will take me pass retirement age 67 will this effect taking out the equity also can I offer to pay the 7 year to finish my Iva, when I have spoke to the agent from the Iva they just say don’t worry
Dom says
Ok, to cut a long story short at the end of my 5 years i was told i would have to take out remortgage via a 3rd party (which when i delved deeper was clearly a loan). The loan would have been £10k plus £2k broker costs paid back at an extorionate rate over the same length as my remaining term of my real mortgage – i calculated i would have repaid £35k by the end of it, which was in fact my original debt when i started the IVA in the first place. I complained at length about the above unfairness and the fact this wasnt’t made clear to me at the start of my IVA and also my IVA terms were also unclear on the matter. They quickly backed down and agreed to just having a 6th year added to my term which is what i expected at the start in all honesty. I wonder if they didnt want the attention of a complaint to the financial ombudsman!?
Sara (Debt Camel) says
That’s good news, well done for standing firm about this. Your original post on it was in September last year (https://debtcamel.co.uk/iva-equity-release/comment-page-2/#comment-241569) – this must have been a very stressful time.
You can’t complain to the FOS about your IVA but it’s possible that you could have complained about the secured lender (Select Partnership) as they were offering you a loan which was clearly not in your interest.
A 23 year secured loan at 12% (variable, it would go up when interest rates rise) is not what most thought they would have to get at the end of their IVA!
Would you mind saying who the IVA firm is? It could help other people they try to pull the same trick with.
Dom says
Yes, it was Moneyplus, but it was Select that tried to exert the most pressure albeit in a civil way.
Sara (Debt Camel) says
Thanks – I will start keeping a record of the IVA companies so I can tell people which IVA firms to avoid!
Lisa says
Hi Sara
I am hoping for some advice, interlocking Iva taken in June 2013 aperture didn’t contact me re: equity release I had to chase them and finally they picked this up this month ( payments left) I have had a valuation of 155000 and my mortgage redemption is 135612, meaning based on the LTV working out as per the protocol we would have negative equity. Aperture work net worth out different to the gov protocol for which mine is compliant. They still referred me to select who are saying I can get a 2nd charge mortgage at £139 over 15 years. Aperture now saying I have to pay for a further 12 months . I don’t agree with the way the calculate the equity release my agreement is so unclear. I’ve emailed them to no avail so have escalated to the supervisor awaiting their response. Is there anything else I can do?
Sara (Debt Camel) says
You are doing the right thing to escalate this. You need them to put in writing exactly what this calculation is. Let me know how you get on!
Jim says
If you’re not happy with the answer you get, ask to speak to your IP. Don’t talk in terms of complaints just yet (that kicks off a whole different set of processes and your priority is to get this resolved.) and you will get a definitive answer which may well be different from the’business’ answer!
SmiffyJones says
Hi Sara,
I have an interested only mortgage and entered into an IVA April 2014. I have been advised by the IVA company that come Oct this year I will need to get a valuation done on my property. I did say to them at the time of taking the IVA out that my Mortgage was interest only (never got round to changing it). How can there be equity in an interest only Mortgage?
Sara (Debt Camel) says
Equity is the difference between the value of the property and the amount of your mortgage-it’s the same for Interest-only mortgage’s as repayment mortgages.
When does your mortgage end?
Julie says
I have an iva with money plus and they have now referred me to select to release equity in my terms it just says I need to get 2 mortgage quotes to release equity and if I can’t they will extend my iva for a further year . I don’t want to get a secured loan with high interest my payments are 170 into my iva is it right that a new mortgage can cost me no more than half of the 170 ?? Plus my mortgage ends in 8 years surely it would cost me more than 85 pounds to remortgage plus who will give me one I onky earn 20k and my mortgage at moment is 176k with about 30k equity I’m cross as it never said about another company trying to do this for me …
Sara (Debt Camel) says
“a new mortgage can cost me no more than half of the 170 ??” a new mortgage cannot cost you more than 170/2=85 more a month than your current mortgage.
How much equity does Money Plus say you have at the moment? Do you agree with this figure? It’s not clear to me that you have more than £5k equity to release. That is the first thing to challenge. It is the most important because if you do not have at least 5k to release, you cannot be asked to pay for a 6th year either as the article above explains.
The next thing to challenge is that you are being asked to consider a secured loan when there is no mention of one in your T&Cs.
And finally there isn’t the slightest chance anyone will allow you to remortgage. It is also highly unlikely that even Select (who don’t seem very fussy at all) would give you a secured loan with that income. If Select did offer you a secured loan you should put in a formal complaint to them (not to Money Plus) saying they have offered you a loan which is unaffordable and not in your best interests and take this case to the Financial Ombudsman if Select reject your complaint.
But as I said, start by challenging the fact that is any equity to release. And do not agree to pay an extra year if your T&Cs say that you shouldn’t!
Sara (Debt Camel) says
As another point, what plans do you have to repay your interest-only mortgage when it ends in 8 years?
Julie says
I don’t at the moment probably have to sell at that point
Sara (Debt Camel) says
OK, well read https://debtcamel.co.uk/interest-only-mortgage/ and see what you can do to improve your position before then. it may not feel like a lot but it could make a difference to your options.
Julie says
I have spoken to select they have told me they are going to look in to see if I have equity in my house …if so whether they can find a company who will remortgage me or a second mortgage against my main one …i said that’s a secured loan.he said no a second mortgage? I also confirmed that it could not cost more than half my iva which is 85 pounds ….so how can he get me a mortgage for over 180k for 85 pounds a month then he said maybe a second mortgage but surely that would cost more than 85 pounds and take more than 11 years to pay?
Sara (Debt Camel) says
A second mortgage is exactly the same as a secured loan.
But the first step is to establish if there is any equity in the property to be released – if there isn’t all the rest of this goes away.
Have you had aa valuation done?
Julie says
Yes there is about 80k in equity
So it is a secured loan not a mortgage???
Sara (Debt Camel) says
ok you said earlier “my mortgage at moment is 176k with about 30k equity”, but the house value has gone up a lot? Do you agree with this? Where did the house valuation come from?
A secured loan is the same as a second mortgage.
Julie says
I got a valuation from an estate agent and select are going to do an online one ….so it’s not remortgage then as surely no one will remortgage me…..and I told them that so they said a second mortgage but my iva does not mention second mortgage which is really just a secure loan which will have huge interest rates how do u think they could do that as I’m only allowed to pay no more than 85 pounds extra ?
I asked what would happen if I refuse what they come back and offer he said I would then be breaking my iva ??
Sara (Debt Camel) says
OK so the actual figures are ” 176k with about 80k equity” – is that right? I know you want to talk about other points, but it really matters that this valuation is correct.
But you only earn 20k a year.
So there are two grounds for objecting to this second mortgage / secured loan. The first is that there is no mention in your IVA T&Cs that you have to take one. The second is that it is likely to be unaffordable for you.
Don’t let yourself be bullied by Select. Wait to see what they are suggesting then complain not to them but to your IVA firm that you are not obliged to take a secured loan / second mortgage.
Are you struggling to make the IVA payments at the moment? Do you have expenses that have gone up – water, council tax, petrol etc?
A griffith says
I am 6months away from the end of my IVA. I received a letter now telling me to have my house valued to release equity. I don’t want to release anything. Do I have to? What’s the government input then?
Sara (Debt Camel) says
Is there enough equity in your house to release? put the numbers into the calculator in the above article. If there isn’t, then you get a valuation to show this and that should be that.
Assuming there is enough equity to release, if you can’t get a mortgage offer (and no one will offer you a mortgage will they) then you should just have to pay another years IVA payments instead.
Only problem is if your IVA firm says they want you to get a second mortgage/secured loan – in which case come back here.
Don’t know what you mean by government input.
Peter Ramsbottom says
Hi, I have an IVA with Freeman Jones and have completed our 6th year of payments after initially agreeing to a 5 year term.
During this time payments have increased from £333 to £759. We were looking forward to eventually completing our agreement only to be told it would run for at least another 3 months and maybe longer. This is due to creditors asking for more payments to be made.
We are now 91% fully paid after initially being told that the IVA would wipe off 70% of the debt after 5 years.
Why is this happening and how do we resolve the problem?
Sara (Debt Camel) says
“This is due to creditors asking for more payments to be made.” Creditors can’t just ask for more, there has to be a specific reason, so you need to ask Freeman Jones why you need to make these extra payments.
“We are now 91% fully paid after initially being told that the IVA would wipe off 70% of the debt after 5 years.” The 70% reduction you were quoted was not a promise, it was what would happen if your income and expenses remained the same and you didn’t get any windfalls or PPI refunds. This is often badly explained when someone is sold an IVA, but you were agreeing to make extra payments if your income went up.
Tony says
Hi
I am on an IVA and my business is on a PVA, paying separate monthly payments to the IVA and PVA but under one agreement plan.
We are now coming to the end of our plan and have been instructed to have our house valued and put my half of the equity into the plan.
My house is valued at £175,000.00 and the redemption figure is £146,782.00. I’ve read that I need to put 85% of my half of the equity but they have stated that they want all of my equity share. Is this right from them?
I`ve spoke to a mortgage adviser and been told that I can`t re-mortgage. I can`t get a personal loan, but I havn`t tried to get a bad debtor loan because the repayments would be crazy.
I`ve looked through the agreement and it states that if I can`t remortgage I can source a third party sum equivalent to the value of my share of the equity…what does a third party sum mean exactly?
It states that if both of these options are not possible they will allow a maximum of twelve monthly contributions beyond the 60 month term at the same level as paid in the 5th year of the arrangement. Do you know if this would apply to my IVA payment only or would it be my IVA and business PVA payments that would be extended.
Thanks you in advance
Sara (Debt Camel) says
“’ve read that I need to put 85% of my half of the equity but they have stated that they want all of my equity share. Is this right from them?” It sounds unusual. Can you ask them where in your IVA T&Cs it says this?
“a third party sum mean exactly” money coming from someone else, eg a relative.
“Do you know if this would apply to my IVA payment only or would it be my IVA and business PVA payments that would be extended.” Sorry but you need to look at the terms of your PVA.
Tony says
Thanks very much for your reply Sara, thats two of the three options ruled out then.
Elise Davies says
I’m coming to the end of my 4th year with my iva its only in my name but a independent mortgage company that we used 5 years ago has contacted us to ask if we would like to change our mortgage with a better deal as the deal we are on now is ending. I’ve explained about my iva but they have said thats fine as they will take me off the mortgage and only use my husband for the remortgage so it doesn’t affect it. Where do I stand with the restriction and also any payments the iva may want? Very confused at the moment.
Sara (Debt Camel) says
That is an odd offer… Most mortgage lenders wouldn’t allow you to remain on the deeds but not be on the mortgage. And the IVA firm would not allow you be removed from the deeds. I would suggest at the moment that a lower mortgage may not even help you. Lower mortgage payments may sound nice but they would just result in higher IVA payments, which could cause more problems when it comes to releasing equity. You could suggest they contact you again in a year after the equity release (or not) is sorted?
Kelly jones says
Hello my iva firm got took over so there has been a few issues I finished paying it off last nov and when I rang them they said the account would be closed the following may, so the beginning of june I rang them to query this they said no we need to check for equity release so I said well I paid 6 yrs into mine cause i was in negative equity so they wouldn’t be able to get anything at the end so I agreed to this but they saying that its not how it works ive sent all the documents that they requested but I’m positive that I shouldn’t have to do this, any help would be much appreciated thanks in advance Kelly.
Sara (Debt Camel) says
If you have sent all the documents and you are in negative equity, it should all be sorted pretty soon I would hope. Come back if it isn’t!
Kelly jones says
I sent them just over 2 weeks ago I rang them this morning and said it had been sent 2 the other department so would probs be another few weeks just want to get it all resolved now I would of had all this sorted earlier but they hadn’t asked me for it
Tony says
Hi
I am nearing the end of my IVA and have had my house valued as instructed to give my 100% share of the equity which is to the value of £14,109.00. From comments and answers on this thread I read that I should only have to give 85% of my share of the equity. Is this figure set in stone or is there an option for my creditors to choose 100%.
I can`t remortgage, I can`t get a personal loan and I don`t have anybody who can give me a 3rd party input to the value of my equity.
In my agreement it states that if I can`t raise the money by means of remortgage or 3rd party input they will allow the agreement to be extended by 12 monthly payments of the year 5 agreed increased payment amount. I`ve asked if this is possible but I have been told that if the creditors accept and allow the extension it will have to be over a lot longer period until the amount of my equity is paid off. Although the creditors put this into the signed agreement can they alter the agreement to suit.
Sara (Debt Camel) says
“is this figure set in stone or is there an option for my creditors to choose 100%.” This depends on the wording of your IVA. 1005 would be unusual…
Who is your IVA firm? How much are you paying every month?
“Although the creditors put this into the signed agreement can they alter the agreement to suit.” No – but again it does depend on the precise wordding of your IVA.
Tony says
Thanks for your reply Sara
I am with Begbies Traynor and in the 5th year paying £294.00 per month.
The arrangement states:
“If the debtor is unable to procure any new mortgage facilities, this will not be viewed as a failure to comply with the terms of the arrangement and the Supervisor will have the discretion to consider alternative proposals including:
. a third party sum equivalent to the value of my share of the equity; or
. a maximum of twelve monthly contributions beyond the 60 month term at the same level as paid in the 5th year of the Arrangement”
Obviously if we are allowed to carry on with the payments until the full amount is paid to them this will take around 5 years which if this is how it has to be I`d happily do but if it states in the Arrangement should that stand.
Thanks Sara
BRIAN says
We have been in a joint IVA for 5 years on 12th August 2018 and have been paying £144.00 per month.
The IVA was for 5 years. We were aware that this could have an extension for another year, however wee were never contacted by the administration company until we contacted them 4 weeks agoasking what we need to do.
Only this week they have sent us confirmation that we have to apply for 2 remortgages to release equity.
If we get rejections then the IVA will continue for a further 12 months.
We have a house worth £243,950.00 with an outstanding interest mortgage of £151,000.00 with 2.5 years left of this current mortgage.
We are both 67 years old with just our pensions as income.
Our son is willing to make a full and final offer of £1,700 to end this situation rather than us try and (and possibly be refused a remortgage)
remortgage?.
This whole situation is very stressful to us Is this possible or do we have to try and get a remortgage considering that my wife is seriously ill.
We can afford to continue making the payments of £144.00 per month for 12 months just but would rather accept our sons help.
Any advice would be appreciated.
Brian
Sara (Debt Camel) says
Thumbs down to your IVA firm which has left all this to the last minute – unnecessarily stressful for you and your wife.
At your ages, with an IO mortgage ending in a couple of years, it is vanishingly unlikely that you will be able to get a remortgage! If you ask your current mortgage lender and pop into a local bank and ask them, you should be able to get two rejections pretty quickly and painlessly I would have thought.
Your creditors are unlikely to agree to an offer from your son until you have these rejections – because a remortgage would give them much more money.
If your son does make an offer, this usually takes several months to go through, as it needs to be voted on by your creditors.
Are you actually struggling with the payments? Because if your expenses have gone up and your income has reduced, given your ages and your wife’s health (I assume you can get a letter from her doctor considering this) it may be possible to ask your creditors to just agree to end the IVA in August with no 12 month extension.
BRIAN says
Thank you,
I have spoken to our mortgage company and they have said that due to the IVA we would not be able to remortgage, however they also said that they wont confirm this without us making a full application for a remortgage which would have to go our our credit file.
We have also spoken to Barclays and they have said the same and also stated that the IVA company should be aware of this situation.
Where do we go from here?.
Sara (Debt Camel) says
You need to make full applications. It’s annoying it goes on your credit record, but that’s screwed anyway (technical debt advice term there!) until your IVA ends, and by the time that happens the hard search by the mortgage lenders will have dropped off.
Tony says
Hi Sara
I am in the final months of my IVA and after speaking to a mortgage lender and two loan companies I have been told that I can`t re-mortgage while on the IVA or for 18 months after the IVA has finished. The loan companies said an application will be thrown out straight away so there`s nothing they can do for me. My IVA company is now asking for proof in writing which none of the companies can do as they was verbal conversations.
This is proving very hard to sort and its dragging on too long for comfort. Can you advise me how to get this in writing please.
Brian says
This is the same situation that we are find and it’s really causing us some stress
Tony says
Agree with you Brian. Pressure from the IVA company to provide proof but the not knowing how to sort it quick is stressful.
Sara (Debt Camel) says
See my reply to Brian above. You need to make a formal application and have it rejected I am afraid.
Tony says
Thanks Sara
Sorry for sounding dumb but when you say formal applications, is this different to speaking to loan companies and getting a no. At this point, they understandably want to move onto their next potential client.
Sara (Debt Camel) says
These “loan companies” are they mortgage lenders?
Tony says
No, I`ve spoke to a mortgage adviser who has spoke to several mortgage lenders and I`ve spoke to two loan companies who I got off of the internet
Brian Newman says
Well, I went in to our local Halifax to enquire about a remortgage and was told that they couldn’t consider a remortgage due to both our age (67) and also due to the IVA. I asked if the could supply us with a letter to confirm this to which they replied “ it’s all in our terms and conditions and therefore the IVA company should be able to view this on line”. Therefore no refusal letter was available. Call our IVA company and they said we must continue to try and get confirmation. In the meantime they will apply for an extension to extend the current arrangement for a further 6 months, to finalise the realisation of our assets.
Where the hell do we go from here.
Sara (Debt Camel) says
Go to a different mortgage lender.
Darren says
Hi there
I have currently been in a Iva for 6 years and currently paying £180 a month I was originally paying £400 but couldn’t afford the payments and so there was a creditors meeting and payments were reduced and a year was added to the Iva,so I think I have one more year Iam a little concerned about equity release on the mortgage of the house in the final year
My Iva was 2012 so not on the 2014 or 2016 rules
We owe 97000 mortgage me and my wife (my wife is not in the Iva) we currently pay £1017.00 a month mortgage
The house is valued roughly maybe £160,000.
Would I have to remortgage or pay another year
Thanks in advance
Darren
Sara (Debt Camel) says
Was your original IVA 5 or 6 years? If it was 6 at the start, what was the reason for this?
Julie says
Hi again
Select came back and said as I have 80k equity in my house that they could offer me a secured loan for 3500 to end my IVA. Firstly this would cost me £85 a month for the next 7 years making me pay back just over 7k they can not ask me to pay more than 85 a month as my IVA is 170 but in my IVA there is a clause saying about if there is only 5000 being released then they wouldn’t ask me to do it or does that just mean 5000 equity not what is affordably released?
I have rejected the loans due to my on going health problems which I have sent medical evidence to my IVA as I can not even guarantee i will be working in 7 years also because of the huge amount of interest the loan who cost me. This has been put to the creditors and they have now asked for the details of the loan can you advise on the above.
I also pointed out to money plus that if I extended my IVA by 16 months that would equate to 3500
Please can you help me as I feel money plus get annoyed with all my questions
At the start they told me they doubted any one would lend me money they keep saying it’s a remortgage but it’s not it’s a secured loan
Please help
Julie
sarah devine says
Hi there
I wonder if you can give me a bit of advise please me and my husband are now in the process of having to release equity, we have been in the IVA for 5 years and we got this in 2013 so it will be a re-mortgage. for the first 18 months we paid £180 a month then circumstances changed and now pay £460 a month! in our contract it was estimated we would have to release £8200 on £180 a month we never received another contract when we started paying £460 a month, our house is worth £129.000 and we owe £38.000 and we have 9yrs and 10 months left.
with us paying more a month than when we started this IVA we thought the figure would be less but they are wanting £19.000 equity I just cant understand how they can ask for that amount when we have been paying more a month plus collecting on our ppi’s I hope you can give us some advise please from a very stressed woman!
thank you
sarah
Sara (Debt Camel) says
“our house is worth £129.000 and we owe £38.000” are you saying your mortgage is 38,000? Or that the debts going into your IVA were 38,000?
sarah devine says
we owe 38000 on our mortgage
Sara (Debt Camel) says
The amount you have to release isn’t reduced because you have paid a lot more in UNLESS you are close to repaying all of your debts in the IVA in full? How large were your debts?
“we never received another contract when we started paying £460 a month” that is because your IVA hasn’t changed – it always had a term which said your payments could go up if your income did.
Is the £460 a month affordable at the moment? Have they taken into account any increased expenses?
A remortgage will almost certainly be rejected, so you should only have to pay an extra year of payments instead.
sarah devine says
Our debt was 42,000. We can afford our current payments at the moment, and we have not done a income and expenditure form for this year,
how ever the debt company select have just sent us a income and expenditure form today to fill in, we have told them this is a re mortgage a couple of times but they keep going on about high street chains for a loan and mentioning a second charge mortgage? could you tell me if that’s a secured loan? and any other names they might call a secured loan? a bit worried they are going to give us a loan and saying its a re mortgage.
thank you
Sara (Debt Camel) says
Yes they are talking about a secured loan – the last loan I saw Select come up was over 20% interest… Tell them your IVA only refers to a mortgage not a secured loan. Who is your IVA firm?
sarah devine says
Aperture is the IVA firm
Sara (Debt Camel) says
Were you originally with them or DFD?