Andy, yes we do have an equity release clause, but my thinking was that if I could take a further advance at 'normal rates' now it would leave a bit over to actually live a bit! 11% to 19% as offered as a likely rate obviously makes this a non-runner.
To be honest it all strikes me as a bit of a racket. Given the current base rate, I can't see the justification in charging such exorbitant rates on secured lending, unless of course these lenders are merely preying on peoples desperation.
There is definitely a measure of greed / preying on desperation, but these secured loans are looked on as a means to an end. The plan is to pay these higher rates until such time as your credit record clears up (aided, perversely, by the green ticks this lender should be reporting to the CRAs), then refinance the deal at High Street rates.
The annoying thing is that, having undergone the rigours of an IVA, we are probably a better risk than many with a great score but "in it up to their necks".
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Absolutely agree with you Foggy. The whole set up re credit ratings defies logic. Surely our current lenders interest would be better protected if I pay a lower, more reasonable rate to them, rather than having my pants taken down by profiteers! And at the rates mentioned payments would more or less be equal to IVA payments, so where is my incentive to honour these historic debts as soon as possible, which I would imagine is the most desirable outcome for all parties? Also bearing in mind that at it's highest our mortgage was not a lot less than we would now need to cover ALL liabilities, the equity in the property was significantly less, and our income was also irregular(on my part) and considerably less on my wife's. Surely, by any logical metric Now Us would represent a far better risk than Then Us!
In my personal opinion it's not really the responsibility of a new lender, who isn't a creditor in your IVA, to provide you with an incentive. They offer products based on what they perceive to be an increased risk and yes, they are a commercial organisation. However I agree entirely with Foggy - someone who has been through an IVA is actually far less likely to miss payments in the future. We campaign continually with lenders on this front. I believe that the purpose and spirit of an IVA is that you repay as much as you can reasonably afford and release an agreed amount of equity from your property. This is why your creditors agreed to it in the first place and I think you have to also try to see it from their perspective. Given that you are now asking them to write off even more of the debt it is arguable that it is they who need the incentive. I am simply trying to put across a balanced view. Furthermore, as I mentioned on a previous post, monthly repayments shouldn't exceed 50% of your IVA contributions and therefore the higher the rate the better it could be for you. Again, as Foggy mentions if you are then able to re-gear your arrangements once the IVA is settled, you would be consolidating a smaller loan! Ultimately none of us can change the world overnight and we have to deal with the facts put in front of us.
Specialist Mortgage Advisers. Highly Commended at the British Mortgage Awards.
Shaun, I'm not suggesting that a new lender (or to be more relevant to the thread, my current mortgage lender) should give an incentive. I'm saying there is no incentive, a big difference in nuance.
I do understand how business works, the perceived higher risk is bogus, as you will agree. It's profiteering!
I would take the point that someone who has been through an IVA is more likely to honor debt one step further and say that someone who even enters an IVA is showing some sense of responsibility, and desire to address debt, more would pay, can't pay than could pay, won't pay!
I'm puzzled by you words 'Given that you are now asking them to write off even more debt' Please tell me where if have said I expect any further write down of debt. I would hope that it might be inferred from previous post that I am more than happy to pay the full amount of debt outstanding.
I'm equally puzzled by your point about a higher rate being preferable as monthly payments shouldn't exceed 50%. Are you too clever to understand the basic tenet of my initial question? I asked if there is a reason why, given our improved situation we couldn't try to borrow from our existing lender to pay off the IVA, thus paying a smaller amount in repayment to that mortgage( albeit over a longer period) than the current monthly IVA payment. If you can explain how a higher rate would benefit me in this scenario, I would be very interested to hear it.
I doubt you will make much headway with changing attitudes I'm afraid. Logic and commonsense will always be trumped potential for profit. It's convenient for these lenders to consider a person in an IVA as a high risk as ,surprise, surprise many will be forced to take such loans to release equity!
I am going to wrap this thread up now, Shaun has given a professional perspective to the points raised and this is most welcome,as are all the other posters opinions
Reality is that current lender will not help even though on paper all will benefit [existing creditors, the debtor and the existing mortgage company], the lenders all have certain hurdles for a debtor to get over and an existing IVA seems to be a very high hurdle at the moment
