www.iva.co.uk

Hi, I am new to this. Have seen many posts referring to some clause about 4th year re-mortgage or equity release. I have no idea what this is, but in my circumstances there is no way I could remortgage, Could anyone explain please?

kalf

There is I believe a clause in an IVA that states that you would have to look to try and obtain a remortgage in the 4th year of your IVA.

Obviously with the current climate this is not always possible.

I am sure one of the IP`s will come on and tell you what happens if a remortgage isn`t possible.

You say that "in your circumstances that there is no way you can remortgage", why is that.Tony

Creditors expect clients to remortgage in year four to a maximum of 85% loan to value. If it is not possible to do this because of income, age lack of products etc the IVA can be extended by 12 months for additional payments to be made.

Hi Tony. I had skin cancer over a year ago, nothing to worry about as mine was the one that rarely spreads, but this now affects my husband and myself getting another mortgage. My husband would never be accepted getting a mortgage in his name only on his wages, as such a remortgage is a no-go. Kal

Hi Michael, so in our circumstances an IVA is likely to last 6 years? Bankruptcy is getting to sound better all the time.

If there is equity and you cannot remortgage you will almost certainly face a six year IVA. You could try a five year and exclude the house on the grounds that you cannot remortgage but it is likely that creditors will extend the term. It there is no equity now bankruptcy may well be the best option as you will not have to worry about any subsequent recovery in house prices given you will benefit and not your creditors.

House is at moment in negative equity. If in 5 years house is still in negative equity and no chance of remortgaging, will creditors then expect to extend period of IVA?

I too am confused about this clause. Do I understand it right that if I remortgage, the creditors get any equity, my monthly payments stay the same, yet my mortgage has increased?? Surely this is only putting us back on the rocky path of debt, by increasing our mortgage payments which will still be there once IVA is complete??? I am only in the second year of IVA, but am worrying about this already.

If there is no equity in year four the IVA will cease at the end of year five. If there is equity and can be released the IVA payments will reduce or cease to take into account the increased mortgage payments. If there is equity but it cannot be raised by way of remortgage the IVA will be extended by up to twelve months.

I hope this is clearer but if not let me know.

Ok, thanks Michael, all has now become clear. So I can only hope house stays in negative equity, otherwise will have IVA extended by another year. At least I can prepare myself for this.

It does not have to be in negative so long as the equity is less than about £5k. Only equity above that is sought to be released by creditors.

Currently at this stage of my Iva and am waiting a variation regarding my equity (or lack of it) at beginning of IVA had about 14000 now have about 2000 so I have a clause which states that IVA could be extended up to 12 months in lieu of equity.

Check your proposal/chairmans report.

Most of them will say that if you have equity below £5000 then the house is taken out of the equation and your IVA will conclude after 5 years.

Check with your IP.

Good post thanks for explaining as I was a little unsure about this, even being in an IVA for 18months now! I just thought I'd ask nearer the time!

kalf wrote:

Ok, thanks Michael, all has now become clear. So I can only hope house stays in negative equity, otherwise will have IVA extended by another year. At least I can prepare myself for this.

If the house is in negative equity you do realise that the likelyhood is if you go BR you would KEEP the house without any hassle??
Have a long hard look at the options and please dont avoid bankruptcy because of any stigma etc. It serves a purpose and may be the right way forward for you.
Make sure you arent in careers that may be affected by bankruptcy before deciding. And keep posting.

Paul.