Hi, just wondering - our mortgage payment is going to go down by £1k as of November at which point I think we will be in position to go for an IVA, however until then we will be struggling to make the minimum payments. My partner has started speaking to creditors (Egg only so far) re: can they help & they agreed to freeze the interest for 6 months and reduce the min payment to a 1/3!!! which is great I guess. Is it worth entering into agreements with creditors for a short term period (4 months) only to enter into IVA later on? We have been up to date with payments so far but all credit run out now and we realised we are in real trouble!!!
Would this only irritate the creditors (asking for their help to start with and then entering into an IVA?)
Totally agree - make token payments to them for a while, then go for an IVA.
It will make no difference as to whether you get accepted or not.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Hi and thanks for the responses.
I have got another question though, hope you can help - say we are lucky enough and enter an IVA come November once the ridiculously high fixed rate on our mortgage ends and drops to 1.99% above base rate...we will obviously calculate our budget with this new low repayment in mind...what happens though when the base rate goes back up again? (our mortgage is £286k...)
I know you have annual reviews but what if in the space of 5 years it goes up again to more than what we could possibly afford? Does that just mean that our IVA could fail later on...from reading posts all day today I understand IPs do their best etc. to negotiate...
Also we have around £40k equity, property worth possibly £325k, but we want to avoid moving for kids...stability, good schools to put them into etc.
As our fixed rate ends in October we will be free to re-mortgage, is that something they would consider at the beginning of an IVA? or do they only look at that option at the end of year 4?
I am not quite clear on f&f settlement - we owe £86k together..
You do need to be careful with mortgage rates as they are bound to go up over the next five years. Why not explore the possibility of fixing your rate for five years. You may end up paying higher payments, but it gives you the certainty that there will be no nasty suprised which might disturb the IVA along the way.
Hi Melanie. That makes sense, however with the amount of unsecured debt (£86k) and the fact we havent got any cash to live on - I doubt that anyone would even touch us for a remortgage? Or is that not the case?
You may struggle to get a good fixed rate as you are at almost 90% loan to value and most good deals are for borrowers with at least 25% equity. However, as Melanie says it would be worth discussing with your current lender because they may be happy to fix your rate given that you will be going onto 1.99% above base. If they can fix you at a level a couple of percent above that they will be making more money while rates stay low.
I have just checked their website, offering 6.29% as the lowest for 2 years only...but I will give them a call shortly to see what they've got to say...
What do most people do re: fixing mortgage when entering or whilst in an IVA?
Surely you cannot base your budget on something that is more than likely going to change anyway...?
but then I guess we could compensate increase in base rates with the fact that kids will start school in the future, hence no ridiculous nursery fees?
Exactly Sash. IVAs are flexible as five years is a long time and circumstances do change. No one wants to fail an IVA through no fault of the debtor and if interest rates do start to rise it will mean that the economy is starting to recover. When this happens property prices will begin to rise again and more lenders will re-enter the adverse market. You may be in a position at this time to remortgage and offer a full and final settlement.
In addition, your IP can go to creditors at any time with a new offer. If the children do finish school and go to university or whatever, it may be that your current home is no longer necessary for your needs. You can offer to sell and retain some funds for a smaller property and give the rest to creditors as full and final. No one has a crystal ball which is why any changes can be made during the term and always inform your IP as they happen.
