www.iva.co.uk

I have 6 months left before the completion of my IVA. Under my agreement I have to try and release some equity in my property in the final year of my IVA. My IVA providers have found a secured loan which they believe will close my IVA. It is at an APR of 20.5% and runs over 15 years. Is this normal? I feel I am being left with a large debt (about 15% of my original debt) albeit substantially less and more managable than when I first applied for my IVA.

Hi and welcome.

I'm not sure on this one at all - hopefully one of our experts will be along to advise later.

How much equity is in the property?

A 15 year loan seems rather a lot to expect you to take on especially at such an APR. Not keen on iva furm sourcing loans either as clearly theres a conflict of interest. They wont give a hoot at the interest rates as long as they can finish the iva.

Paul

Even my secured loan was only over 10 years and is due to finish in a couple of years time. Don't know what the APR is but it's nowhere near that high.

Welcome Andy, it would be interesting to know your administrators. I'm not entirely sure they can endorse, let alone provide details, another avenue of debt. Whether it concludes your IVA or not. Tread carefully and proceed with caution. It just doesn't seem right to me.

Hi Andy and welcome, that does seem a very high APR but expetced perhaps during and IVA, what does your IVA terms list when it comes to getting equity? Does it suggest that your IVA company can/may provide a company to release the funds if you cant get them? Is there the option to extend your payments a further year instead? this I am sure would be a much better option perhaps?

You're right to question this and hope that one of our expets may comment in a general capacity as I realise they can't give specific advice but would not sit right with me getting into debt again after completing an IVA. x

My concern would be that the APR is unlikely to be fixed over the 15 yr term, so essentially that rate could rise along with repayments and become utterly unaffordable. We all know that these institutions rarely reduce interest rates.

There were a few posts on the forum a few months ago where the same thing was happening to people being forced to take out loans by their IVA company to meet the equity clause in their IVA`s.

One of the forum experts was in favour of such loans and a heated thread evolved on the issue, I wonder if it could be found and bumped up the forum.

I was told during my whole initial IVA setting up process, and my proposal stated that in the event of me being unable to remortgage in my final year, at the descretion of the IP, I would pay an extra 12 months at the current IVA payment amount in lieu of equity, and I`m sure that many others were told / sold the same, basically 5 / 6 years and that`s it.

I`m sure that many people, myself included, will feel they have been duped and even conned by their IVA company if they are forced to take out a lengthy loan at high interest rates to meet the equity release clause, when this was never even mentioned when setting up their IVA.

You take out an IVA to solve your debt problems, not exacerbate them and a 15 year loan at 20.9% APR is doing just that...it`s basically a 20 year IVA[:(!].

What a scary prospect.

I would check your proposal and speak with your IP and suggest an additional 12 months if possible, but all IVA's are personal and you may have a minimum dividend to reach or equity amount written into the proposal they require.

This sounds very strange to me too. Why would you want to go into such debt when you're so close to finishing? Enquire further!!

I think, in the previous debate on this subject, a lot was made of the wording of the proposal in question. If the proposal states you need to REMORTGAGE, then a secured loan cannot be forced upon you.

However, as always the devil is in the detail, and it all hinges on the wording in the proposal. Some, older, proposals merely stated that a given, specified, amount had to be introduced, and made no mention of the whys and wherefores.

I agree with Goosed.

I do not feel you should be forced to take on a secured loan which may well become un-affordable. What does seem to get forgotten that although you may have equity in your propety it is your home and therefore it is all on paper unless you sell. One of the reasons many people people enter an IVA is to keep their home.

It certainly was not explained to me that I might have to take on a secured loan at a high rate of interest.

Why would you want to agree to that Andy - unless the terms of your IVA specify that you have to refinance rather than remortgage. Be very careful about jumping from the frying pan into the fire, when you may not need to. Get your IP to explain their reasoning in line with the specific terms of your IVA proposals.

Is your IVA covered by the IVA protocol?

Goosed - you have definately neither been duped or conned. The advice I gave you at the beginnning of the IVA process is as good now as it ever was.

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by MelanieGiles

Why would you want to agree to that Andy - unless the terms of your IVA specify that you have to refinance rather than remortgage. Be very careful about jumping from the frying pan into the fire, when you may not need to. Get your IP to explain their reasoning in line with the specific terms of your IVA proposals.

Is your IVA covered by the IVA protocol?

Goosed - you have definately neither been duped or conned. The advice I gave you at the beginnning of the IVA process is as good now as it ever was.

I know Melanie, just as you know and archived posts of mine illustrate, I have nothing but the highest regard for you and your company.

Andy.tw`s post, like others that have appeared on the forum, show that an increasing number of people approaching the end of their IVA`s and expecting to soon be debt free, are being told by their IVA companies they will have to take out extremely lengthy high interest loans to meet their equity release requirements, when they had no idea whatsoever - and hadn`t been told this could happen.

As I posted, I imagine many people in such a predicament would feel duped or even conned, as would I facing such a scenario.

I know people have posted `check the wording of your proposal`, but why would or should you need to if your IP has never mentioned at any stage the fact that you may need to take out such a loan?