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?
sarah says
no it was called Grant Thornton then changed to aperture
Sara (Debt Camel) says
That’s good. (Because DFD sneakily got many people to agree to the new secured loan clause being added to earlier IVAs.)
Steve says
Im coming up to the release equity part of my IVA and Im worried. We have a joint mortgage with 51K left to pay and a current valuation of around 200,000 leaving around 150K equity, we have 6 years left on our mortgage repayments, My IVA repayments are £215 / month.
How much will they expect of me, My original IVA agreement says I will release £31,500, I cant afford to add that to my mortgage, If I could I would off paid my debts as agreed when I took the loans and only agreed to an IVA after a change in circumstances.
Sara (Debt Camel) says
Have you put your figures into the calculator on the article?
Christopher Lovell says
Hi , So i have the same question, im in my last year, Currently my house is around 180k mark, i have 138 k left on my mortgage, I will be referred to a specialist lender by my IVA , So more than likely they will provide me a re-mortgage. My salary is better than at the start of the IVA my rate was always high 3.99 per cent. My question is , where is the calculator to see if i will be asked to re-mortgage. Will i lose all the Equity in the property
Sara (Debt Camel) says
the calculator was removed as it slowed down the loading of the page a lot.
Is this house in your name only?
How much are you paying to the IVA now? This is affordable? Will it be affordable after energy bills, council tax, national insurance, broadband and mobiles go up in April?
christopher lovell says
Hi yes in my name only currently £238
Sara (Debt Camel) says
This is affordable? Will it be affordable after energy bills, council tax, national insurance, broadband and mobiles go up in April?
christopher lovell says
After all my bills at the end of month I will be left with £754 disposable that’s with taken some of the increases into place
Dan says
Hello,
I was hoping you can clarify some points re IVA`s, basically my parents joint own their own home and no mortgage. My dad is in an IVA and I am worried that the creditors will request to sell the house. Is that possible?
It was started in 2015 and he is 58.
Also what happens to the property if something happens to my dad? Would they force to sell the house to recover the debts?
Is it possible for him to transfer the property to my mums name?
Thanks,
Sara (Debt Camel) says
It would VERY unusual for there to be a requirement that the house was sold. But IVAs can be unusual so the only way to be sure would be to read the documentation your dad has.
Normally in the 5th year (so in 2020) your dad would be obliged to try to “release equity” from the house by getting a mortgage or a secured loan. This term of this loan couldn’t extend beyond his state retirement age, which would be when he is 66 in 2024. So it could only be for 4 or 5 years. And it couldn’t cost more than half his current IVA payments. It is more likely that he would have to make an extra year of IVA payments instead.
Do you know if your mum signed an RX form from the Land Registry when the IVA was set up?
If your dad died when the IVA was underway, the IVA may fail, leaving his estate to pay his debts. But his IVA firm may be prepared to propose to his creditors that his IVA is treated as completed – this is more likely the longer an IVA has been running for, in the first year it is much less likely than in the last year.
His half of the house will normally be listed as an asset of the IVA in the documents. If it is, then he can’t give away his share of the house to his wife.
Are you just worrying about this or is your dad actually ill at the moment?
Dan says
Good Morning Sara,
No she has not signed an RX form.
My mum is worried due to the fact she will face the burden which she didnt sign up for. He is fine but you never know in life and wanted some information on IVAs
If that is the case due to retirement, would the creditors not want a full and final settlement now? Ive asked him to let me see the documents and what is owed. What % would be a offer to be accepted for an IVA? He is on a very low income and would like to see if any was due to irresponsible lending.
Sara (Debt Camel) says
If she hasn’t signed an RX form it may well be that the house has been excluded as an asset in the IVA – you need to see the documents to check this. If the IVA is for 6 years not 5, this is another sign that the house was excluded.
His creditors may be happy to accept a F&F settlement now. If his house is excluded then offering the amount he will repay over the rest of the IVA should be enough.
BUT he may have a problem making an unaffordable lending complaint after the IVA finishes. Sometimes any refund he gets will be paid to the IVA company even if the IVA has completed.
Dan says
Thank you Sara,
I will check these documents. Have a wonderful day
norman wilson says
hi,i have been in an iva for 1 year,can i get equity release and pay off the other 4/5 years to clear the debt. or would i have to pay the full debt.
Sara (Debt Camel) says
With an IVA showing on your credit record, you would find it VERY expensive to try release equity to do this. Why would you want to get a very expensive long term secured loan putting your house at risk? If you just pay the IVA payments each month, there is no interest on these.
Emmet says
Hello,
myself and my wife are currently in the last 7 months of our 5 year IVA, we were originally paying £420 a month which was increased to £495 at the beginning of our 5th year due to increased hours I was working. We owe £44000 on our mortgage and estimate the value of our home at £90000, our mortgage payment is currently £463 per month. It would seem we are going to have a lot of equity, we owed our creditors £42000 at the beginning of our IVA.
Regards
Emmet
Joanne says
Hi, I’ve been in an Iva for 3 years, me and my ex partner are selling a house we owned together, the house has sold for 90,000 there is 73,000 left on the mortgage, can the Iva take any of my equity? How does it work? Our solicitor has emailed to say there is a restriction on the property from my Iva company, I don’t want to have to give them the little bit of equity as will really help me out. Is there a way around it?
Sara (Debt Camel) says
This could be a big mistake, see https://debtcamel.co.uk/iva-sell-house/. You need to talk to your IP and see if you can retain any of the equity.
Elizabeth earle says
Im concidering an IVA. I have about 20k of debts. My house is worth about 135 (because i used 25k of savings to do it up rather than extend mortgage) with a 75k mortgage. This is my main concern. I can mange the IVA fine but i dont want to touch my house. I will make sure i dont have the “secured loan” issue so in theroy if i just make sure i apply to mortgage lenders whose criteria i dont meet i wont be made to re-mortage?
Sara (Debt Camel) says
“I will make sure I don’t have the “secured loan” issue” – how do you propose to do that?
Mel says
Hello
I started my Iva in Dec 2012 for 6 years I then had to sign the variation in 2014 which they added another 12 months to my Iva making a total of 7 years. I’m now in my 7th year and they are saying I need to get a valuation for equity release. I thought when another year got added I did not need to do equity release. I have now read on different forums they could make me take out a high interest loan.
It’s only my name on the mortgage as I had it before I met my partner.
Sara (Debt Camel) says
Who is the IVA firm? Why were you told you had to agree to another year in 2014?
Mel says
Originally debt free direct and taken over by aperture in 2017.
I can’t find any paperwork showing the extra year but it shows on the portal ending in Dec 2019.
They sold it to me as though it will stop equity and make it easier for homeowners.
Sara (Debt Camel) says
I suggest you go back to Aperture and say you were told the extension in 2014 was instead of later releasing equity and ask if that was not the reason, what the purpose of the extra year was. If you don’t get a good answer to that, I suggest you put in a formal complaint to Aperture saying that you only agreed to the 2014 extra year because of what you were told, and unless Aperture can explain what the other benefit to you was, they should accept your explanation and agree that your IVA will end at the end of the 7th year.
Jessie Smith says
Hello
My husband and I entered into an IVA with DFD in June 2012 and were set up for 6 years. We have paid the 6 years but due to DFD being taken over by Aperture we were not contacted regarding equity release until this year, 2019. We have input the figures onto your calculator and it is saying less than £10,000, usually no remortgage. However, Aperture are saying we need to release equity with the reason outlined using the calculation below :-
Property Valuation – £39,125.00
Less Mortgage – £28,684.68
Less Selling Costs – £1,369.38
Available Equity – £9,070.94
85% Available Equity – £7,710.30
This is based on one half of the value of the property. It seems correct but we are unsure as the calculator is telling us different?
Sara (Debt Camel) says
The problem here is the way Aperture are interpreting the “leave you with 15% equity” rule.
Most firms – and the calculator – say you have to be left with 15% of the value of the property in equity. The way Aperture are doing the calculation you are only left with 15% of the current equity, not 15% of the property value.
But first, why was your IVA 6 years? Were you told by DFD that this was instead of having to release equity at the end? I have come across several people saying that…
Jessie Smith says
If I remember correctly we were told we had to do 72 months instead of the usual 60 months because we were paying the minimum amount required for an IVA to be accepted. We were even struggling paying that and I did contact DFD 5 months in to say we were still in financial difficulty but I was told there was nothing they could do.
JOANNE says
We started an IVA in 2014 which finishes July 28th 2019, our Mortgage has also just finished this was a 5 year IVA. can they make us pay anymore if the debtors are still owed.
Thanks
Joanne
Sara (Debt Camel) says
Your mortgage finishing was a predictable event at the start of your IVA – was this not discussed when the IVA was set up?
Has your IVA firm (who is it?) been in touch about equity release?
John fister says
I have an issue we aperture at moment and trying to clarify.
In equity release stage got a valuation on house based on the leasehold to buy being 4K. Which was 102k and sent to aperture however got in touch with leasehold for actual figure and they said 14k to buy leasehold went back to estate agent for realistic price baes on uodated lease cost which they did and cane in at 92k.
I have 83309 outstanding on mortgage . It’s a joint Iva for me and my partner yetaoerture saying more than 5k in equity which if you do maths is not the case.
Also there website states equity is amount left after remortgaging minus existing mortgage and any secured loans . As remortgage is set at 85% luv surely they can only use one method by there own admittance from there website.
Can I argue this
Sara (Debt Camel) says
“aperture saying more than 5k in equity which if you do maths is not the case.” You can definitely argue that.
Dom says
Check the actual terms of your IVA in this matter. My terms stated that if i couldn’t remortgage i may be asked to extend my IVA to a sixth year. Seriously no bank i know would let someone remortgage with an IVA in place, but when i was near end of 5th year of IVA i was asked to take out a loan instead with a 3rd party. I was being asked to take out loan for £10k plus £2k admin fee over 20 years (yes 20) which would have meant me repaying the full original IVA amount all over again (£35k). When i wrote to company pointing out the actual terms of my agreement they actually quickly folded, and i accepted the 1 year extension which meant paying £2.5k more, not £35k. My IVA ended in May and I’m now debt free. Hope this helps.
Kim says
Hi
My mum has an IVA, and lives in a maisonette with stairs both outside and inside and as she’s 80 in September and has problems with walking, so I’d like her to move into a more accessible property. Earlier in the year, she was asked to remortgage her property to release some equity. However, as she is 80, she told them that she would be unlikely to be able to do this, and was told she would have to pay the additional year, which is now due to finish in June 2020. However, she struggles to make ends meet, due to the IVA payments (£126 on an outstanding amount of £20,968 to the creditors. She also pays £250, a month on a mortgage for the property (of which £26,500 remains – to be paid back by the time she’s 90!!), and a secured loan of which £4,000 remains). Her house is worth (according to Zoopla) about £121K – although would probably get about £100 – £110K for this if she sold it. My question is, would it be better for her to sell her house and pay of her debts, and then rent somewhere, or is it better to let the IVA play out and then move?
Thanks for your help.
Sara (Debt Camel) says
it was a shame that she didn’t think about selling and moving 5 years ago instead of this IVA.
Read https://debtcamel.co.uk/iva-sell-house/ which looks at selling a house to end an IVA. This isn’t that simple… and it will take a while. Where she is now, it may be better for her to just let the IVA run though. But if she has to move for mobility reasons, she needs to go through the process of proposing a full and final settlement, as described in The better way… section of that other page.
Another option might be if you could offer to pay the rest of her IVA payments now if that might be possible? Disentangling the IVA from selling the house and moving.
before the 6 years is up she won’t be able to get another mortgage, but it sounds as though you don’t think that will be possible anyway?
Lynn Holland says
could i ask if the ‘your expert group’ are anything to do with Creditfix please? I’m being told by Creditfix that I have to work with them to release equity in my home. I dont want to as i feel I can manage this myself. Am i obliged to do so? If they are is this not a conflict of interest on their behalf?
Sara (Debt Camel) says
Could you ask Creditfix if this is an FCA authorised mortgage lender or broker? If so, what is the name of their company?
John says
Hi
I took out an IVA in July /August 2014 for 6 years paying £100 per month. I owed about £23000.
At the time I was told I would be looking for a for a mortgage after 6 years or pay for a further year.
My house is in both my wife and my names but we do not have a mortgage on the house. It’s worth about £55000 according to rateable valuations., I live in Northern Ireland. The IVA is only in my name. I am in temporary employment which at best could last about 3 or 4 years longer. My wife doesn’t work. I will be 60 years old in July.
I am worried about being forced into equity or mortgage.
Have you any advice?
Sara (Debt Camel) says
At your age that doesn’t sound very likely. And any mortgage or secured loan could not cost more than £50 a month – half what your IVA payments are.
So another year on the IVA sounds most likely. Can you afford to pay that?
John says
Thanks for the reply.
Yes I believe I could afford another year.
Jackie says
My sister took an IVA with Aperture in August 2012 and made payments for 5 years. She sadly passed away in July 2019 and and i am dealing with her estate. I am now being informed that she had an equity release clause as part of the IVA ( I am waiting for the paperwork). I am confused as it is now January 2020 and 2.5 years has elapsed since she last made payment and no request from Aperture to release equity. With the amount of time which has elapsed, do Aperture have to take some responsibility. and at least try and contact the creditors and request completion of the IVA My parents are next of kin and in ill health and i am worried they will be left to offer proposals to the creditors. They have informed me they will fail the IVA unless i provide details of my late sister’s finances. I have informed them I will release details once I have received paperwork from them, so informed decisions can be made. What can I do as my parents will not be able to pay. Thank you very anxious
Sara (Debt Camel) says
She had a 5 year IVA? How much equity is there in her house?
Is there a reason she never asked Aperture for her completion certificate? Was she ill at the time?
jackie says
I am unsure what type of IVA she had, but I think it was one that an equity release in the last year. In 2017 she was in some ill health but not for one minute did she think she was going to pass away some 2.5 years later. Why did Aperture not pursue the equity release. I cannot answer why she did not ask for her completion certificate. The house is in disrepair but there should be some limited amount of equity once sold.
Thank you
Sara (Debt Camel) says
I think it would be a good idea to get a valuation on the house now and ask the estate agent what it would have been likely to have been work 2-3 years ago.
Lucy says
We’re about to go into our 5th year of IVA and we have £75000 equity. It is unlikely we will be able to remortgage. We currently pay £765 per month to the IVA and by the time we have finished our 5th year we will only be £4-5k away from what we originally owed. Is it likely we will have to make a 6th year of payments? My house is falling to pieces and we can’t spend any money to fix anything. I’m so worried that by the time we can start saving and are able to release equity, it’s going to be another 3 years down the line and our house is going to be derelict.
Lynn says
This might seem like a daft question but if I can release equity in my property does that end the IVA or do I still have to pay my monthly payments as well? I can’t afford to do both.
Also Creditfix insisted I cooperate with the ‘your expert group’ who said I don’t have enough income to release equity and said that was their outcome and now I’m getting letters from Creditfix asking me to approach lenders myself again. Can they do this? They also don’t respond to my queries and have added a debt from the Inland Revenue that I don’t owe. I’ve queried this with them and heard nothing at all.
I am in my 2nd month of year 5. My IVA is a 6 year one as they wouldn’t agree to 5 so if I can’t release equity will be paying for 7
Sara (Debt Camel) says
I Creditfix directed you to a specialist then the chances are that lenders you ask will not be prepared to give you a remortgage and you will have to pay for another year. Just wander into a couple of local banks and ask them.
Are the payments causing you a lot of problems?
Lynn says
I’ve struggled for 3 years. They say they’ll look at varying it but I would be required to pay an extra 12 months instead, that would mean I’d pay for 8 years. That would kill me I’d rather struggle. If I release equity do I continue to pay the monthly IVA?
When I agreed the IVA I was earning 3 times as much working as a foster carer. I had to give it up due to a couple of reasons so took on a different job with a lot less pay. Also my son used to live with me and they accounted for his rent in my income. He left over 12 months ago so I have a lot less coming in now. I live on my own and have had in the last 2 years lots of extra expense like essential house and car repairs which have cost a lot more than they allow me for. I’ve had 2 months break from the IVA which helped to pay for some of the repairs but in the long run I find every day a struggle. I even lost my little dog recently because she became ill and I’d had to cancel her insurance. She was my only friend.
Sara (Debt Camel) says
That sounds very tough, especially the dog :(
I suggest you go back to Creditfix and say you don’t think you can manage even another year of payments. Ask for your creditors to be asked to accept that your IVA is completed “on the basis of the payments made to date.”
Binu says
Hi
I started my IVA in Aug 2015, now Aperture referred me to a third party to arrange for a equity release. My mortgage in in joint name with my wife and the IVA is just for myself. The real problem is that our relationship is at the edge of breaking down and we are together just for the sake of children. At this stage, she wouldn’t cooperate with me especially anything to do with house and they need her permission to go ahead with equity release assessment. Do I have any other ways without her involvement?
Sara (Debt Camel) says
what are your current finances like – have either of you had income problems because of coronavirus?
Binu says
I have been on self isolation last two weeks, eligible for statutory sick payment for minimum wage.
Monthly IVA contributions has increased from last month even though statement balance was negative, 178 from 138.
House probably worth of 220,000 and remaining mortgage is 130,000, with remaining term of 15 years.
Is there any possibility of additional 12 months payments instead of equity release, so that I don’t have to as my wife to involve with anything.
Sara (Debt Camel) says
“I have been on self isolation last two weeks, eligible for statutory sick payment for minimum wage.”
when do you expect to return to work? is your job safe?
“Monthly IVA contributions has increased from last month even though statement balance was negative, 178 from 138.”
can you say some more about this?
who is your IVA firm?
BINU says
IVA firm – Aperture .
Job will be safe as I am working in a care settings, expected to return in a week if I am well by then.
Monthly contribution- I just received a letter from Aperture last month saying that my monthly contributions will be increased without any proper explanation.
Vicki says
Hi,
We entered into an IVA with Creditfix in 2013, for 5 years, we went through some difficult times and our payment had to be reduced so they added on a year making it 6 years total. This ends next month, there is less than £5,000 of equity in our property. Creditfix have written to say if there’s no equity released we will have to pay another year, is this correct?
Sara (Debt Camel) says
Was there less than £500 of equity in your property before April? ie before any Coronavirus affect on house prices?
Vicki says
There is less than 5 thousand and it was January ish when it was valued, before Coronavirus. Thank you for your reply.
Sara (Debt Camel) says
There have been some new rules introduced about equity release because of coronavirus – see https://debtcamel.co.uk/coronavirus-new-rules-ivas/.
The wording isn’t totally clear but the intention is to help people, not get an extra year of payments out of people who would never have had to release equity before these rules.
I suggest you go back to Creditfix and say as your equity is below £5k you do not think you should have to pay an extra year and ask them to confirm that your IVA will be completed next month.
Please come back if you have further problems with this!
Anisa says
Hello
Hello I have a question. I have received a letter from my IVA company saying the equity in my house is above £5,000. They got this information from a morgage statement – not a redemption figure
They will get a morgage broker to try and a re-mortgage .
I don’t know if they have done a property valuation.
What will happen if a re- mortgage application is successful- is it likely to be successful.
I am aware if it is unsuccessful IVA will be extended for a year
On my mortgage statement it says as at
01- Apr- 2020 amount Required to Redeem your account is £55,136.68. I have not had the property valued recently I am guessing around £80,000 I think.
Sara (Debt Camel) says
ok, so you think it’s safe to say that there is more than 5k equity. Can I ask who your IVA firm is? Do you know if your IVA was done “under the IVA protocol”?
Anisa says
Yes I think they is more than 5k equity. I agree
The IVA is with NTF financial solutions
I do not know if the IVA was done under the IVA protocol-
My IVA is due to end in September 2020 they have sent me a letter saying a mortgage broker will call me to make a re-mortgage application
Thank you for your help.
Sara (Debt Camel) says
ok, I suggest you go back to them and say that you have read (in https://debtcamel.co.uk/coronavirus-new-rules-ivas/) that there is no need to try to release equity because of Coronavirus and you will just have to pay another year. See what they say – it only applies to “protocol IVAs” but 90%+ of IVAs are protocol IVAs.
Anisa says
Thank you very much for your reply.
Can I just confirm is it a better option for me to extend the IVA for another rather than getting an equity release.
House price £80,000 –
mortgage redemption figure £55,136. 68 equity in the house is £24,863.32 – this is how i have worked it out – out of this how much would they take – not sure how it works ?
Sara (Debt Camel) says
the article above has a calculator you can use to work out how equity they would want you to release.
I don’t know how much you are paying a month so I can’t say what would be “better” for you. In practice it’s very unlikely you would be offered a mortgage, but you could be offered a secured loan at a very high rate of interest I suppose.
If you think you would have problems paying the IVA for another year, you need to tell your IVA firm that, say why you can’t afford it and say you would like your IVA firm to propose to your creditors that your IVA is closed now on the basis of the funds you have paid to date, not extended or equity release.
Anisa says
Hello
I do not trust my IVA company at all. They do not make things clear.
I make payment of £98.00 per month to NTF and my mortgage amount per month is £470
I did request to exit the IVA early wanting to make one last payment – they said it would be £2000 – I was going to borrow that amount from my mum. However it was rejected – I have sent you a message previously- I did not declare rent and did not do a tax return – I am now in the process of providing this information requested
I await for your reply .
Thank you very much
Sara (Debt Camel) says
ok, but I can’t say if you will be better off with a remortgage or paying an extra year.
George says
I am 4 years into my IVA. The Administrator has recently written to me regarding equity release in the house I live. The house was purchased by my wife (in her name solely) before we were married (but were together) approx 10 years ago. The IVA administrator informed me at the beginning of the IVA that even though my name is not on the paperwork, because I pay towards the bills and living costs of the household, I am considered as owning equity in it.
The house was purchased on a Part buy/Part rent basis (25% mortgage/75% rent)) at a purchase price of £110k.
The house is now valued at £220k and my wife still owes approx £19k on the mortgage.
Based on the above figures, are we likely to be forced to still release equity in the house? If so, how much do you think it will likely be?
Many thanks
George
Sara (Debt Camel) says
how large are your monthly IVA payments?
did you wife sign an RX1 form at the start of your IVA?
George says
Hi Sara,
Thanks for the reply.
1. My monthly payments were organised as follows:
First 23 months @ £86.00 pm
Next 34 months @ £218.00 pm (actual payments are now £261 pm due to a couple of authorised payment breaks).
Last 3 months @ £393 pm (It was discussed at the time that if we were unable to secure a Remortgage then this payment level should continue for a further 12 months – although I can’t seem to find that in the original IVA proposal right now).
The stair-casing above was set to coincide with the Staggered ending of 2 personal loans in my wife’s name.
My wife was required to sign an RX1 form (which was done within 3 months of the approval of the IVA).
Also, after perusing your site, I note something about Coronavirus and the easing of Equity Release conditions?
I stated that the house was in her name solely and she pays the mortgage, but their answer to that was: As she bought it when we were together and I pay towards the household bills, I am considered as owning Half the equity in it…as such it would be subject to being included in their decision making.
Thanks
George
Sara (Debt Camel) says
So on that basis I suggest you use the calculator in the article above, saying that you own the house jointly with someone who does not have an IVA. And use 25% of the value not the full value as she only owns 25% of it.
George says
Hi Sara,
Ok, have done that and it comes up with figure of “Remortgage for extra £13,875”.
The next section then asks what my current monthly mortgage payment is and my IVA payment. When I enter that info…..
Current Mortgage Payment = approx £140.
IVA monthly payment = £393 (it will be in the last 3 months anyway).
A red box comes up with “Sorry, there were some errors with your request. Please try again”.
Also, could you explain if I may be able to use this new Coronavirus rule to do with equity release I have read about on your website? Personally If I am subject to having to release equity, I would rather pay the £393 for the extra year so as not to affect my wife’s mortgage.
My wife is currently on a 3 month mortgage payment break (Due to me being off work for the last 11weeks, shielding our children from Coronavirus). She took the decision to opt for the break because initially I was not being paid from my workplace for being off (however, this has now been changed to the 80% furlough payments).
If we are forced to remortgage, would I have to remortgage the house jointly with my wife or can she do it solely in her name again?
Sorry for all the questions, there’s just a lot to consider and it’s very helpful to be able to get advice/be pointed in the right direction by someone far more knowledgeable on the subject.
Kind regards,
George
Sara (Debt Camel) says
ok there is glitch in the calculator where there is a high IVA payment and a low mortgage amount. It should come to 140 + half of 393 = 337.
You are trying to shield your children – does one of them have a serious health problem?
In practical term, if you are furloughed and your wife asks for a further 3 month mortgage payment break, which she now can, I find it difficult to imagine any lender would offer to remortgage. the shared ownership mortgage market is a very small number of lenders.
Do you think you can actually afford £393 a month for the next year?
George says
Hi Sara,
Ah ok, thanks for the clarification on the caculator.
Yes one of our children (further testing required to confirm whether or not our second as well) has been confirmed to have a very rare genetic lung condition called PCD (it’s unlikely you will have heard of it) and we have the government letter stating she is at higher risk and needs to be shielded (and a further government text message extending her shielding until at least the end of June). We decided to take the mortgage break instead of contacting my IVA administrator for another potential break as I have previously taken 2 breaks in my IVA which I’m already now paying extra for to make up the shortfall.
Are you saying, there is now legislation allowing families to potentially extend the mortgage break for a further 3 months? (totalling 6 months).
Since taking up this IVA we have massively improved how we budget and knowing that this £393 per month payment is for the duration of just 1 final year, we absolutely CAN and WILL make it work to achieve the relief of finally getting this debt that has been anchoring me (us) down once and for all.
Many thanks
George
Sara (Debt Camel) says
Are you saying, there is now legislation allowing families to potentially extend the mortgage break for a further 3 months? (totalling 6 months).
Yes.
we absolutely CAN and WILL make it work to achieve the relief of finally getting this debt that has been anchoring me (us) down once and for all.
it’s great to be determined!
But my point was that if there are good reasons you cannot afford the £393 then you can ask for it to be reduced or for your IVA to be ended early. The health of your child is very important.
George says
Hi Sara,
Thanks for the heads up on the extended payment break, we will definitely attempt to get the ball rolling on that.
Ah I see what you mean about trying to get reduced payments. In all honesty, we already made the IVA company aware of our daughters health issues (and associated costs) from the start of the IVA (even before we had an official diagnosis which took specialist consultants over 3 years to arrive at). Certain expense allowances were incorporated for this at the time so I don’t want to push my luck on this front.
That was an interesting post from Anisa… is this all I have to really do to get the IVA company to extend by a year instead of forcing us to remortgage?
Thanks
George
Sara (Debt Camel) says
Yes probably…
George says
Thanks Sara,
I will try that and let you know how I get on. Congratulations Anisa, glad it worked out for you.
Kind regards,
George
Anisa says
Hello Sara
I am very confused on my last post I mentioned my IVA company have decided not to release equity from my house and have confirmed in writing to extend my IVA for another year.
I recently received a letter to say they will try to get me out of the IVA early by requesting to the credits and they is information I need to provide. I have provided the tax returns on the rental income and provided income and expenditure form- they have now worked I need to pay £228 every month for another year. I don’t know what the early exit amount will be ??
Sara (Debt Camel) says
I recently received a letter to say they will try to get me out of the IVA early by requesting to the credits and they is information I need to provide.
I don’t know what they are suggesting. Are they saying there will be an early exit amount? It is in theory possible to ask the creditors to close the IVA now with no extra payments.
Anisa says
Hello Sara
Thank you for your reply. Should I Email them asking what is the early exit amount? Can I ask them to request to creditors will they allow to close the IVA – without any extra payments. IVA company have not made it clear. It seems they will request to creditors to exit early with a lump sum payment which I will need to pay – they rejected it first time and now that I have now provided all the documents they will put the request through they might consider – it now.
What is confusing me is the fact they have extended for a year – so why are they doing this to exit early?
Sara (Debt Camel) says
I think you need to ask them what is happening and point out you don’t have a lump sum you can pay any early exit payment with (if that is correct).
Anisa says
Also I wanted to ask is they any new regulations – where the IVA can close the IVA if I requested it. This whole issue is confusing and it’s stressing me out. I am taking antidepressants and sleeping tablets to cope. I have sent my IVA company a letter from my GP stating I suffer from panic attacks and this issue is causing me severe anxiety.
Sara (Debt Camel) says
This doesn’t need new regulations. It has always been possible for an IVA firm to suggest to the creditors that an IVA should be “treated as completed on the basis of the payments already made”. It is good you have shared your mental health problems with your IVA firm.
Anisa says
Hello again –
The lump sum payment was around £1700- this was the amount the IVA company said I had to pay for early exit. I was going to borrow this amount from my mum to clear and finish the IVA early. I don’t know if it’s the same amount or more they have not got back to me on this. They extended the IVA for another year so I thought that was the end of it. Now they are saying they will put foward to the creditors for early exit – if the amount of the early exit is higher – I can not afford to pay it. I am going to send another email to them asking them to clarify and make things clear as to what they are doing. I will also ask if would close the IVA without any payment – this issue is affecting my mental health . I just want it to be over I want it to end . I have been carrying this burden of debt for years – I just want it to end
Rachel says
Hi
Im after some advice. My husband entered into an IVA 4 years ago without telling me and i only found out when i opened some paperwork. We have a joint mortgage with about £60k equity i think the IVA is approx £15k, £25 k of the equity is my inheritance when my father passed away. I certainly dont want to look at remortgaging for something that i had no involvement in and would not have approved if i had known. Plus i dont want any type of rejection on my credit report which is very good. Is there anything i can do?
Sara (Debt Camel) says
Have you looked at your credit record? It is probably already damaged because you have a joint account, the mortgage, with someone in insolvency.
Have you asked your husband about this? It is possible to exclude a house from an IVA, you need to know if this has been done in his case.
If the house is not excluded, you should have been asked to sign an RX1 form putting a restriction on the sail of the house.
Rachel says
Since finding out about the iva i have been keeping an eye on my credit score and it is 999 so its not impacted my credit at all and have recently taken out a loan with no issues.
I didnt sign a thing, there was no discussion with me and no one from the iva company contacted me. I have thought about complaining to someone/anyone as how can they do this without the joint person not agreeing to it. So if i havent signed this form, does this mean they cant go ahead without my permission?
Sara (Debt Camel) says
That seems odd. Have you talked to your husband about this?
Rachel says
He just says something about extending the iva for another year. Obviously i cant really rely on what he says.
Sara (Debt Camel) says
if he can’t remortgage, it is normal to make another year of IVA payments. Ask to see a copy of his IVA documentation.
Anisa says
Hello Sara
I have got a letter from my IVA company – the amount I have left to pay Is £3300 – they said they will request to the creditors to see if they will accept it. I have another 15 months to pay £228 per month- however they have said because I have mental health issues I can make a lower amount offer and see if creditors will accept it. If I offer £2000 do you think the creditors will accept it. It’s all I can afford my mum will be giving me this money. I also requested for the IVA to be called on the basis of what has been already paid no lump sum – this was rejected because my income has not been affected by Covid 19
Sara (Debt Camel) says
I’m sorry but I really can’t guess what will be acceptable. If you have medical evidence about your mental health issues that can help. Also if the money is coming from your mum and it is all she can afford, that should be explained.
Farukh Ali says
HI,
I have an IVA finishing in March 2022.
I have a Builders Equity on my house coming to an end December 2021 for which I need a borrowing of £40,000/-
I need advise on Remortgage whilst I have an ongoing IVA.
I have a property value of £140,000/- approx and I have approx £82000/- mortgage balance to pay (which is ongoing monthly)
How or who can assist in lending me with a bad credit history due to IVA and an ongoing IVA. I have used the calculator and I am ok in paying the amount after remortgage as I have a stable job.
Thank you
Sara (Debt Camel) says
What is this “builders equity”?
Jeremy Wagg says
I think the situation with jointly owned properties is not very well understood. Basically, my understanding is that you cannot remortgage, sell or raise a secured loan unless the other person who owns the property with you agrees to do this. If they don’t agree, there is nothing the IVA provider can do to force you to raise funds on your property. I hope I’ve got this right?
Jeremy
Sara (Debt Camel) says
Hi Jeremy,
is your client worried about starting an IVA?
or are they at the point where they have been told to release equity?
did their partner sign an RX1 form?
Jeremy Wagg says
Hi Sara,
I am not currently working with a client in an IVA equity release situation. I was just seeking to reassure (hopefully correctly) anybody reading your blog about jointly owned properties. I am a Money Adviser with Citizens Advice and find your blog very useful.
Kind regards,
Jeremy
Sara (Debt Camel) says
I would be uncomfortable about offering general reassurance if someone is being told to release equity by their IVA firm who may ultimately threaten to fail the IVA.
Anisa says
Hello Sara
I just wanted to say a very big thank you for all your help support and advice.
I have some good news to share the creditors have accepted my offer – which means my IVA ends after I make the final payment and I will get a letter In 8 weeks time to confirm IVA completed and finished
I am thinking of buying the council house I live in with my mum-
Would I be able to get a mortgage if I applied for one ??
Sara (Debt Camel) says
It is very hard to get a mortgage with an IVA showing on your credit record. Not many lenders offer Right To Buy mortgages So. You would need to talk to a broker that specialises in them tO see if you have a chance.
Alan says
I am into my 4th year, having paid 4yrs 3 months of a seven year IVA. I received a call today saying that the IVA company was calling a creditors meeting to look at requesting me to look into releasing equity, If my IVA is over such a long period do they have the right to request even more from me.
I currently pay £475.00 a month which is difficult to say the least, I was told when I took out the IVA by the IVA company (Since sold to another IVA firm) that it is very rare that they request me getting a loan to pay more to them. but this does not seem the case.
I have no credit rating and I will be 62 when the IVA comes to an end the thought of having to get a loan concerns me greatly.
Sara (Debt Camel) says
Why is your IVA so long?
And when does your current mortgage end?
Alan says
Not too sure, I believe they missed a creditor off originally so said to add them would increase the terms of my IVA. Our mortgage has another 11years 1 month to go.
Sara (Debt Camel) says
Is your mortgage repayment?
What are your pension arrangements like?
Has paying the £475 become more difficult – have your expenses gone up or your household income down?
alan says
Mortgage payments 850.00 per month
I have pensions from various companies that will be available when I retire not a lot in the pot though.
The last four years have been really tough with another 2years and 11 to go then the idea of having to get a loan, after an IVA so we don’t lose our house just seems wrong. It completely goes against the whole idea of an IVA agreement as this was brought about by a failed business.
Sara (Debt Camel) says
So is it fair to say you will struggle to pay the current mortgage when you retire?
Have you asked your IVA firm if your current payments can be reduced?
Alan says
I am more concerned with the possibility of the IVA requesting me to release equity from my half of a joint mortgage. At 62 when the IVA comes to an end.
Sara (Debt Camel) says
yes I understand, but your IVA will have had a provision in for releasing equity.
You may be able to argue that you were told by your IVA firm this would not happen – that was why I asked why you IVA was 7 years – some people originally had an IVA set at 6 years as equity release would not be possible.
One of the best defences against having to release equity is to be struggling to make the current payments.
And if the current payments can be reduced, that in turn reduces the amount you could be asked to pay in equity release.
Alan says
They are looking at reducing my monthly payments currently.
What I don’t understand is why I got a call last week to say they will be arranging a meeting to discuss equity release options with the creditors when I still have 2 yrs 10 months to go.
Thank you for your replies, to my questions really appreciated
Sara (Debt Camel) says
Have you looked at the terms of your IVA? A standard clause would be “Six months prior to the expiry of the IVA (hereinafter referred to as the review date), there should be an attempt to release the debtor’s net worth in the property.” But yours May say something different. If there was an actual date there then I suppose your original IVA firm may not have updated it when your Term was extended…
Or of course thus may just be an error! In which case tell them and this subject will be dropped for now.
Rebecca Robson says
Hi, I’m hoping you can help regards my parents IVA.
They were originally sold their IVA through shawcross and Williams for 5 years. They were told at the end of this they would have to remortgage or pay another year. They were given the choice and chose to pay for 6 years. Their IVA has now been taken over by pay plan as shawcross and Williams folded. They are now coming upto the end of the 6 years and PayPlan are now saying they have to remortgage or pay yet another year. They would prefer to pay another year instead of remortgage (they would like to move once this is all settled) but they’re not being given the choice this time. Can they be forced to do this after being told they could just pay for the extra year initially?
PayPlan are basically saying they were told wrongly by S&W and it’s tough as this is the way it is.
Thank you.
Sara (Debt Camel) says
Are you saying your parents don’t think they should have to either pay for another year OR remortgage because an extra year was added at the start?
Or are you saying Payplan are saying they have to remortgage and can’t pay for another year?
Michael says
I am just about at the stage of my IVA where we are just going to realise the equity off my property,
I’ve currently paid £9832 of the £13110 that I owed! The creditors now want to release a further £13,000 from my property!
This doesn’t seem right to me!
The reason anybody would enter an IVA is because they are struggling!
I was thinking that I didn’t have long to go on my IVA and all of a sudden, I have to pay for a further 10 year’s!
How can this be right?
Especially considering, they advertise about writing off some of your debts!
Sara (Debt Camel) says
Who is the IVA firm?
They are asking you to get a secured loan, have they told you the terms of this loan?
What are your finances like at the moment?
Is the house just owned by you or in joint names?
michael says
The Iva firm is creditfix.
The terms should have been to pay £171 over 21 years but I said I’d like to pay more which brings it down to 10 years.
Finances are okay at the minute. We are not struggling but we aren’t flash either.
The mortgage is in mine and my wife’s name, but the Iva is mine only!
Sara (Debt Camel) says
So how much over 10 years?
michael says
Around about £236 per month
Sara (Debt Camel) says
And how much are you paying to your IVA at the moment? How much equity is there in the house?
Molly says
Hi Sara,
Interested in your advice re equity release. I have a protocol IVA with a large firm with equity clause. My 5 years is May 21 – in September 20 my IP advised the equity release process needed to be completed by Dec 20 in accordance with T&C.
I did see the Guidance on the Government Portal about equity release and Covid. Iasked my IP to clarify this and how it related to me and my equity back in Sept 20. The wording of guidance was quite specific, no attempt to realise equity etc. No direct response in writing and prolonged delay till now Jan 21 that they need a physical valuation of my property as the equity process must be completed.
The IP advisor stated the physical survey of my home would need be carried out by their independent assessor paid out of the IVA pot. This was to ensure fairness – but I may have to wait several weeks even months for this to take place.
My question is this; can an IP or their advisors really behave like this? Is it normal? How long can this go on for – my concern is the process will just be rolled on until the guidance ceases to apply April21? Are they just waiting to insist in May 21 that I attempt to refinance? Should I pay for my own independent survey?
Any advice would be appreciated.
Molly
Sara (Debt Camel) says
I suggest you send them a formal complaint and say it will be taken to the Insolvency Service’s Complaints Gateway if this is not resolved.
Neil Jones says
My IVA was approved in June 2016 on agreed term of 7 years. The seventh year was extra payments to purchase the property equity as we made it clear that my wife, who is not included in the IVA, would not agree to a remortgage or any funds raised on the property we own. Jarvis have now passed my details to a specialist mortgage provider to investigate equity release because a clause was added into the IVa that stated the equity would be dealt with in line with PCIVA guidelines if the equity is not realised in the first twelve months. If the creditors agreed to the extra twelve months payments how can we now be asked to look at equity release ?
Sara (Debt Camel) says
You need to tell Jarvis this. It is a great shame you did not get the reason for the 7th year in writing from Aperture. But 7 years is very unusual and there would need to be a reason for this.
Neil says
The seventh year was added to purchase the equity, these payments are specifically listed in the IVA with the note ‘ to purchase equity’ next to it, so in essence, we have already agreed to an extra year of payments as my wife would not agree to a remortgage or raising of any other funds from the property. I suppose this could be seen as being in line with the PCIVA guidelines ?
Sara (Debt Camel) says
In that case you should be OK. Send Jarvis a formal complaint pointing this out.
Neil Jones says
Hi Sara,
This reared its head again recently. The IVA company (Debt Management previously Jarvis) have said they need a valuation and mortgage redemption statement to activate the extra twelve months. I asked at least three times that no attempt would be made to ask me to remortgage or raise a loan against the property and they said no just to activate the extra twelve months at monthly payments to match the previous year. I just don’t trust them, am I worrying unnecessarily.
Thanks
Sara (Debt Camel) says
Probably. You can ask them to put this in writing if so far it has all been on the phone.
Are your current payments affordable?
Your mortgage – is it fixed or variable? If fixed, when does the fix end?
Lee Elliott says
Hi,
if you are getting an IVA and have a joint mortgage, with a small amount of equity, will they accept that your partner will not consider a remortgage to repay some of the IVA?
Thanks.
Sara (Debt Camel) says
how small is the equity? what are your partner’s financial circumstances like – do they also have debts?
Lee says
My share would be somewhere between £5000 and £8000 I think. Partner is fine financially, and not involved in the IVA other than the fact we have a joint mortgage.
Weatherman says
Hi Lee
You might be asked to release equity in the property towards the end of the 5-year IVA period. If you can’t, this might mean the IVA is extended by a year.
However, if after 54 months of your IVA the value of 85% of your interest in the property comes to under £5000 (so if your equity is about £5880 after 4 and a half years), it’s usually just ignored.
Sara (Debt Camel) says
How large are your debts going into the IVA? Have you already defaulted on them, if so how long ago?
How much is it being suggested you pay to wards the debts?
Dave says
I took an IVA out with Swift 2 years ago over 6 years. The IVA has been passed on to multiple companies and is now with a company called debt movement. I am slightly confused about the equity release aspect at the end of the 6 years. Once I get to the end of the 6 years, I will still owe £X amount. I presume that this amount is the maximum they can take out of any equity that we have in our property? I have tried to ask debt movement what that figure is, but all they say is that it is dependant on my equity review. I am really concerned now and feel like I am going to end up paying more back than I originally owed.
Weatherman says
Hi Dave
Across the whole IVA, you’ll never pay back more than the amount outstanding on the debts when you entered the IVA, plus any IVA fees. If you’re able to remortgage for a large amount, then you could end up repaying more than the amount outstanding on the debts when you entered the IVA, because you would also be repaying IVA fees.
The article above explains how the amount you can be expected to remortgage for is calculated. If you can’t remortgage, you will probably need to make payments for a further 12 months, after which it’s all done.
michael says
Hi Dave, unfortunately, if you have equity in your property, you could end up paying back a lot more than your initial debt.
My personal debt was originally around £16,000 of which I paid back around £13,000.
But when it came to releasing equity on my property, they took as much as they could get. They took around £13,000 plus fees, which amounted to £17,000 which I’m paying back over the next 9 years. This total new debt, with interest comes up to £26,000.
I do have the option of paying as many overpayments as I would like but its harsh but they are within their rights to do this.
So my initial £16,000 debt will mean that by the end I will pay back around £39,000 back together
Sara (Debt Camel) says
That is dreadful.
Do you mind saying who your IVA is?
Dave says
If this is the case, then I feel like I’ve been scammed. I would never have done this if I’d known they could take that much equity out of my property. I feel completely trapped with this IVA.
What I don’t understand is, if I was to win the lottery tomorrow, how do they equate what I would have to pay to clear everything? All they keep saying is we need to do an equity check. So I presume, even if I wanted to pay everything off in one lump sum, they would still want to take equity out of my property?
michael says
Hi Dave, my IVA was with Creditfix
Dave says
Sorry to be asking so many questions. As of todat I have £16,080 left to pay on the IVA. If I wanted to settle, would I have to pay the £16,080, plus IVA fees on top? I presume in this instance there would be no re-mortgage?
Sara (Debt Camel) says
I have £16,080 left to pay on the IVA
is this the total of your remaining monthly payments? For a 6 year IVA?
Why was your IVA 6 years and not 5 years?
Dave says
To be honest, I thought the IVA was over 5 years. It’s only when I spoke to someone at debt management yesterday, that they told me I still have 4 years left. The £16,080 is the total of the remaining yes. I have paid £8,040 up to this point. I can’t remember of the top of my head what the total debt was.
Sara (Debt Camel) says
You need to ask why the IVA is 6 years. Sometimes a 6 year IVA is set up instead of having to release equity…
You also need to find out the total debt that went into your IVA.
Dave says
I have just dug out my chairman’s report and it states that the IVA is over 6 years. The total listed is £28,141. It also lists a supervisor fee of £3,771. I presume this is the IVA company fee?
michael says
It all depends on how much equity you have in your property!
Dave says
By the time the IVA is up, there will be a lot of equity in the property. This is my main concern. I feel like 15 years of paying my mortgage is going to be set right back.
michael says
Thats exactly how I felt bud.
The problem with the whole process is that they advertise about reducing your debt and cutting up to 85% of your debt but then when you get into it you realise its cost a lot more than what you originally owed.
The whole thing stinks of making your credtitors richer to me!
Thomas says
Hi Sara. When I reach the end of 5 years of Iva payments I will be 69 years old. Will I be expected to release equity? I will be 3 years past pension age.
Mike says
Hi, assuming this is a standard IVA protocol compliant IVA then the simple answer is no. Any equity release, under the protocol, cannot take you passed state retirement age.
John Molloy says
Hi
I’m after some advice.
My IVA should finish with my next payment.
MoneyPlus has written to me with an ‘EXTENSION NOTICE’.
They statem my IVA has reached the end of term however they are unable to close the IVA until all final administration has been completed. The term will be extended for 6 months.
Is this common practice?
Do I have to pay further instalments for 6 months?.
Thanks
John
Sara (Debt Camel) says
Are they saying you need to carry on paying? Did you take any payment breaks?
John says
They have contacted to say it was a poorly worded letter.
My payments will finish as scheduled next month.
They stated the letter is to cover the time it may take to do the administration paperwork.
Thank you
Sara (Debt Camel) says
Phew – well done for getting to the end – hope the final review is all ok.
Sue says
Hi , we are in our 5th year off an IVA, I owed £17,000 all together and by the end of the IVA we will have paid back 16,000, my house is worth £90,000 and I owe £48,000 on my mortgage , the IVA are telling us we have to remortgage for £40,000 , how can this be right when we will have paid back £16,000? Im53 my husband is 57 and we are worrying we are going to end up in more debt than when we started
Sara (Debt Camel) says
It doesn’t sound right! Ask them to explain how they have arrived at the 40k figure.
Was the IVA just in your name?
Sue says
No , it was in my husbands name to , their asking each of us to remortgage for £20,000 each
Sara (Debt Camel) says
Can I ask who the IVA firm is?
Sue says
Yes, it’s pay plan plus
Sara (Debt Camel) says
ok so the first thing is to dispute that you have to remortgage for that much.
Also how are you finding the current repayments? Are you managing them oK of is it hard because of rising prices? The fall back if you cannot get a remortgage is that you have to pay another 12 months of payments, so it is worth trying to get these down.
michael Varah says
The same happened to us as Sue.
I owed around £16,000 but after the equity release its ended up costing around £39,000.
It all sound corrupt to me.
Making your creditors richer whilst us normal folk suffer for longer!
Sara (Debt Camel) says
And who was your IVA firm?
michael Varah says
Creditfix
Its all made to think they are helping you but they add extra charges on top. Things like equity release.
They also looked into PPI payments and took money that way too.
Sara (Debt Camel) says
yes PPI was a rip off for you – the reclaim firm would have taken its high fees then Creditfix took another load.
And the worst thing is, if you had been advised to make the PPI reclaim yourself before starting the IVA, the IVA may never have been needed at all :(
PM says
I am in the last 7 months of IVA. They want to release equity but I only have 22 months left on mortgage. Will they expect me to pay beyond this if equity is released. I don’t know how long I will be able to work for because of my health.
Sara (Debt Camel) says
How old are you?
Can you say something about your health problems?
How large are your current IVA payments? Are they OK or are you finding them a struggle?
Your mortgage, is it repayment so after 22 months you will be mortgage free?
(All these questions are actually relevant!)
PM says
I am 52 have osteoarthritis I pay £278 each month. Yes mortgage is repayment so will mortgage free.
Sara (Debt Camel) says
and is the £278 a month affordable at the moment? have your energy bills gone up?
Could you get a letter from your doctor saying it is likely you may have to stop work in the next few years?
PM says
It is at the moment but bills are due to go up but don’t know what to yet. My partner will not sign for a loan as he said its my debt not his because he didn’t know anything about the debt I was in. He has not signed anything all documents were only signed by me. He said he will leave and just pay his side of mortgage and the rest of this bills would be upto me to pay.
Sara (Debt Camel) says
Was your partner not asked to sign an RX1 form at the start of the IVA?
Would your doctor confirm your health problems? You should also tell your IVA firm about these and also mention this to any people they want you to talk to about equity release. Y
Have your energy bills gone up? Are you currently on a fixed rate? It is worth telling your IVA firm now that you are struggling to manage the payments and will need them to be reviewed in April when your council tax and national insurance go up and also your energy bills.
The more you can get your IVA payemnst reduced now, the less money that could be rased through equity release as that cannot come to more than half your IVA payments.
Steve says
I wouldn’t worry, to release equity you will need to remortgage, all you need is to prove you have tried to get a mortgage with 3 different lenders, choose big high street lenders only, you will not get a mortgage with an IVA from a high street lenders
You will in all likelihood be required to pay for another 1-2 years extra though.
I’m 2 years post IVA and went through exactly the same thing.
Sara (Debt Camel) says
unfortunately his IVA firm may want them to get a secured loan at a high interest rate from a bad credit lender :(
PM says
No they didn’t. If I have 7 months of payment left how much equity would they want for a final payment. Surely I would not have to pay using all of my share.
Sara (Debt Camel) says
This is 7 months until the 5 year point? or 6 years?
Was your partner ever asked to sign an RX1 form?
PM says
Until the end of 5 years. No they were not asked.
Sara (Debt Camel) says
the article above explains how much equity you have to release.
The fact your partner was not asked to sign an RX1 form is odd – they should have been unless your house is excluded from your IVA?
You won’t be able to get a secured loan or a remortgage unless your partner agrees. I suggest you need to point out all the problems – your partner doesn’t agree, you are unwell, the current payments are unaffordable to your IVA firm. Offer to make payments for a 6th year instead, but say the rate will have to be reduced a bit because of your costs going up.
P M says
Should I ask for a copy of the RX1 form. They have said they want £15500 as a final payment through equity. The IP said that amount but I never had a chance to even make an offer. My husband is taking early retirement in 3 years. I might have to go part time because of my arthritis in the next year or two or even finish altogether.
Thomas Flynn says
Hi Sara. When my Iva has done 5 years I will be 69 years old. Will I be expected to release equity?
Sara (Debt Camel) says
No.
Well in theory anything is possible in an IVA, but it would be VERY VERY unusual to have to release equity when you are over pension age.
Thomas says
Hi Sara. Thank you very much for your reply. I know nothing is impossible but you have made me feel a lot better about the situation. Best wishes. Thomas.
Sara (Debt Camel) says
Your IVA firm should be able to confirm this, so you will know for sure.
darren says
been in my IVA for about 18 months since my rent gas electric and other bill i can no longer afford my IVA the company have been no help at all and now sent me a letter that the iva has failed not sure what i can do
Sara (Debt Camel) says
I am sorry to hear this.
Can you say something about your IVA – did you have any assets to protect? How large were the debts in it? What was the monthly repayments?
DARREN CAIRNS says
No assets rent the property we live in was paying £50 a month and are rent went up by this amount alone
Have a car but has finance total debt excluding the car around £18.000
Dave says
I am 3 years into my IVA and I am still as confused as ever. When I spoke to the initial company regarding my situation, I made it clear that I was not prepared to enter into the agreement if it would effect my house and mortgage. I was esured that it wouldn’t. My IVA is over 6 years and I thought the additional 1 year was for this reason. However, when I emailed the latest IVA company looking after my account they said at the end of the payments an equity review would be carried out. I will probably have arounf £80,000 worth of equity in my property by this point. It will set me back years. I wasn’t informed about the equity review during the initial phone conversations. I feel like I have a massive weight hanging over me and I am dreading the day the review comes. I wish I had never signed up to this!! It doesn’t help that the company looking after the IVA seems to change every 12 months.
Dave says
Sorry to go on. I am also struggling to find any documentation referring to the equity release. The only documentation I can find is the chairmans report. Would the equity release be mentioned in this?
Sara (Debt Camel) says
who was the original IVA firm? I don’t suppose you have anything in writing about your house not being included?
Dave says
The original firm was Aperture. It is now with Debt Movement. I have noticed on the chairman’s report that my property equity (at the time) is listed, so I presume this means I will have to release equity?
Sara (Debt Camel) says
You can ask DM for a copy of all of your IVA paperwork.
I don’t suppose you have anything in writing about your house not being included? or an explanation as to why your IVA was set as 6 years?
Dave says
Unfortunately not. I am going to email them and ask. They normally take weeks to respond! I presume 5 years is the standard? If you can get the funds from elsewhere, are you able to pay the equity amount without actually releasing it from your home?
Sara (Debt Camel) says
yes, but the point is your IVA is only 6 years because you should not be asked to release equity, so you are paying twice if you offer more money.
Dave says
I have just emailed them requesting all relevant paperwork. My wife is also on the mortgage and has no part in the IVA. Does this make any difference when it come to the equity review? She has never signed anything in relation to the IVA.
Sara (Debt Camel) says
she should have been asked to sign an RX1. If you had told Aperture that your wife wanted the house left out of this so Aperture agreed to the 6 years, that would explain why she was not asked to sign an RX1 form – you should point this out to DM.
Dave says
I will see what they come back with in their response. Thank you for your responses today. I can see you are a massive help to everyone on here. Very much appreciated.
PM says
I have been told I have to release nearly £16k in equity and expect to extend my mortgage term. I have not spoken to my partner but noway will he sign anything. As he says it’s my debt not his as he didn’t know anything about it. He has been penalised enough and he won’t do it anymore.
Sara (Debt Camel) says
I said previously:
You won’t be able to get a secured loan or a remortgage unless your partner agrees. I suggest you need to point out all the problems – your partner doesn’t agree, you are unwell, the current payments are unaffordable to your IVA firm. Offer to make payments for a 6th year instead, but say the rate will have to be reduced a bit because of your costs going up.
Have you done all this?
P M says
I informed them about Husband not signing and that we were having problems and he is thinking of leaving. I have health problem and I get a letter saying if I cannot release equity then they would have to forward me to bankruptcy.
Sara (Debt Camel) says
Which IVA firm is this and who is your insolvency practition? Their name should be on your IVA paperwork.
Keri says
Hi Sara,
I am just deciding if an IVA is for me. I owe £60k give or take a couple of pounds, across 9 companies, after completing the income & I have £160 a month available. I own a house, and I am a divorced single parent. The house realistically is worth in its current condition £110,000.00 my mortgage has 11 years left and a balance of £65,000.00.
I’m behind by about 5 payments on my cards, and credit rating is not good. I’ve searched for loan eligibility and I just can’t get one.
What I am wondering is if my available finances remains around the £160 mark, at the end of the five years I’ll still have a large amount of debt outstanding. I will have a fair amount of equity but I’m worried about getting an equity release loan secured against the property as even though I will have 18 years until I retire the repayment amount would be around £500 a month on that amount and that isn’t affordable. How do I move forward with an IVA in this situation, is it law to enforce me taking a loan when the monthly repayments would be triple my available monthly amount? Thanks
Sara (Debt Camel) says
So a lot of questions to explore if you have any other options and to see how well an IVA may work for you…
Which debt firm have you been talking to that assessed this £160 a month?
Are you confident you can pay the £160 now? Does that take account of your energy bills going up a lot in April?
How old are your children?
Do you own a car?
is your house in poor condition at the moment? An IVA means not having the money to put in a new boiler or washing machine or repair gutters and fences…
it sounds as though you have some very large credit card balances – is that right? Have some of the companies been increasing your credit limit when you were already in trouble , only paying the minimums?
do you have any high cost credit at the moment? Expensive laons, Safetynet Credit, a large overdraft? expensive catalogues?
Keri says
Hi Sara,
I filled in a form on stepchange. I do feel able to pay the £160 a month.
I don’t own a car. Yes I have 4 cards, 3 loans and 2 catalogue accounts. Everything spiralled out of control. Worsened by Covid. I have long Covid now, awaiting an appointment for the long Covid clinic. I also have fibromyalgia and hypothyroidism so heavy brain fog, cognitive processing is also hard at times. Memory problems all effected.
I’ve just been making minimum payments on it all for a while. My loans are due to end in 3 years so I planned on using that money to make extra to cards when that happened but my finances changed last year and I lost £800 a month which was keeping me afloat. The catologues have the highest % rate.
My mortgage is £538 a month fixed for another 18 months, then it will be variable rate. I have looked into getting an additional secured loan to repay debts but the monthly amount isn’t affordable.
If I went ahead with an iva, what should I ensure is in the agreement with regards the house?
I’m not sure if I misread that the additional loan repayment cannot be more than the iva payment amount for it to be enforced or go beyond the term of the existing mortgage is this correct? Or if I managed to get an offer after 5 years of iva and it was say £500 a month more or less but a further 25 years can they force me to accept an offer?
Thanks
Sara (Debt Camel) says
I’m sorry to hear about your health problems. Are they affecting your ability to work? Do you feel that your job is sure for the next 5 years?
You mentioned the current condition of the house – what is wrong with it? If you need a new roof or a boiler in the next 5 years that is a major problem when you are in an IVA.
Do you know how much your energy bills are going up in April? Because they may also go up a lot in October as well…
How old your children are matters. During a 5 year IVA will they be getting to an age where they need pocket money and mobiles? Or will they get to over 18 and you lose all benefits from them?
In an IVA you can only be asked to remortgage for an amount that is half your IVA payments. Not £500 a month! A remortgage or secured loan can go up until your retire or until your mortgage ends, whichever is longer. In your situation and with StepChange this doesn’t sound a particular problem, but I would be much more worried about whether you can really afford to pay the IVA on a sustainable basis over the next 5 years.
Keri says
Hi Sara
Thank you. Yes my health is now affecting my ability to work, my employer is issuing me with 90 days notice due to I’ll health. My employment will end in July22. I haven’t entered into an iva yet. But I really need to act quickly. I don’t know what benefits I will be entitled to I have worked for 27 years. I am under the care of the long Covid clinic & have fibromyalgia & hypothyroidism also.
I was worried that creditors can still take me to court for additional payments if I did a DMP & I lose my home. 1 child will turn 18 in 3 years I currently receive child maintenance for her & that will stop as will child benefit.
I really don’t know what to do. I feel in limbo not knowing what my income will be while needing to agree a debt solution immediately.
Miles says
I am currently in this situation. I have spent 5 years in an IVA that I was promised I wouldn’t have to Equity Release because of my age 63
But although I don’t have to remortgage, they want me to have a secured loan to pay off the final 12 months IVA, about £3,500. I have complained using your complaint template so I am now waiting to see what they say.
They say when you take out the IVA , “reduce your debts by 85%” & “you won’t lose your home”, no, you won’t lose it, but you will have to equity release for the creditors!
Sara (Debt Camel) says
So you knew you would probably have to pay for a 6th year?
How much are your current IVA payments a month? Is this amount really affordable now so much (energy, petrol, food, council tax etc etc) has gone up?
(These questions may sound irrelevant but they aren’t.)
Miles says
£140 per month. That’s without the last rate rise which will mean another £40 into the mortgage.
We can’t afford the IVA really but so desperate to get it finished after 5 years. I mean we have condensation on all windows we can’t renew, an ancient boiler that needs renewing, old furniture etc because we haven’t been able to renew anything during the 5 years.
But Select Partnership say we can have a secured loan, even though we have told them we can’t afford it, as it’s 50% of the iva payments, it really makes you wonder what is going on?
Sara (Debt Camel) says
so you are paying £140 a month now?
And your mortgage is variable rate? How much has it gone up since your last IVA review?
Select are proposing a secured loan of how much? for how long a period? costing how much a month?
P M says
They are asking me to release equity but I have confirmation off my IVA firm that my husband never signed any forms so can they force my to do so if he hasn’t.
Sara (Debt Camel) says
Tell me about the start of your IVA.
Who was the IVA firm?
Was the equity release clause properly explained to you?
Would your husband have signed an RX1 form if he had been asked to, or did you say at the time that he wouldn’t?
Are they asking you at take out a secured loan?
What are your current repayments and are they affordable at the moment? Will they be affordabile if, as expected, energy bills go up another 50% in October?
P M says
It’s due to finish in August. It is Credit Fix. No it was not explained. No he did not sign a RX1 Form I checked. No they tried to remortgage but couldn’t but wants another mortgage to run along side so the dept then becomes in husbands name also. Not sure if I could if bills go up again.
Sara (Debt Camel) says
was he asked to sign an RX1 form?
How much are you paying a month at the moment?
P M says
No he wasn’t. £278 a month
Sara (Debt Camel) says
ok so I suggest you talk to National Debtline on 0808 808 4000 about what payments you could afford. They can help you draw up an income & expenditure sheet that allows for prices going up that you can show to Creditfix.
This is very important here as the secured loan cannot come to more than half of your monthly payments. So if you can argue that the £278 is a lot more than you can afford and it needs to be reduced to say £150, then a secured loan could only cost £75 a month and that may not be worth doing.
Clare says
I’m coming to the end of my 5th year of IVA and been contacted by a mortgage company regarding remortgage. My mortgage is joint but IVA is mine only. My partner is refusing to remortgage as the debt was mine before we met. Can we be forced if she refused? I would rather pay the 6th year despite it being a struggle than have unmanageable mortgage payments for years to come. My partner is on a low wage and my my hours my have to reduce in the future due to being diagnosed with arthritis that will eventually restrict my ability to work. The IVA company are very unhelpful and the mortgage company threatened me with then wanting to know why my partner wouldn’t want to help me if we were in a ‘so-called relationship!! (A bit personal and unprofessional) what are my options. ??
Clare
Sara (Debt Camel) says
Can I ask if this mortgage company is offering a remortgage or a secured loan?
If it is a secured loan, what are the terms – how large is the loan, what is the term and what are the monthly repayments? Will this be fixed or variable rate?
How large are the current IVA payments and are these already a struggle because of cost of living increases?