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I have a question regarding the remortgage clause in my IVA.

I'm about half way through my 4th year of my IVA. At the end of the 5th year will we asked to remortgage or extend the IVA by another 12 months. Currently pay £445 per month into the plan.

The equity in my property is approx 170k and I have 325k remaining on the mortgage. It is owned jointly between myself and my wife.

Our current mortgage type is interest only and we pay £1250 per month.

Really we'd like to get onto a repayment mortgage as soon as possible (both 39 years old) and even if we are able to remortgage (unlikely given the circumstance due to the IVA and some missed mortgage payments over the years) then any repayment would likely be over 50% over our IVA fee.

Q. When we are asked to remortgage at the end of the 5th year would we have to look for a interest only mortgage again or do I have a choice on which mortgage type I apply for?

Combined household income is approx 105k per annum.

I'm also interested in a full and final settlement offer at the start of my 5th year. What should we be looking to offer bearing in mind if we continue on year 5 and 6 the total will be just over 10k? (offer from family)

Thanks.

Hi -- the question of interest only or repayment won't arise as you will not get that far into the application process ! The clause says simply to attempt to remortgage, it doesn't specify further.

For a full and final you will be looking at 24 months ( including the equity extension) at £445 ... so about £10,800. I would offer around £9k ( I have seen lower offers accepted as well as higher ones refused).

On the mortgage front, even if you close the IVA early on a F&F, you will not be able to remortgage at sensible rates until the 6 years is up and your credit files clear.

Hi can I check the mortgage figures? If your outstanding mortgage is £325k and the property is worth £170k you are in serious negative equity and the extension won't apply if you have 'standard' terms - was this a typo?

Lisa Thomas wrote:

Hi can I check the mortgage figures? If your outstanding mortgage is £325k and the property is worth £170k you are in serious negative equity and the extension won't apply if you have 'standard' terms - was this a typo?

Lisa -- OP states equity in the property is £170k, not value.

Thanks Foggy I thought I was missing something!

Switching to a repayment mortgage may sound like a good idea and would probably be obligatory if you switched lenders. This will be difficult until six years have passed from the start of the IVA and you also want to get your name off the IVA register. It sounds like a good idea to offer a full and final settlement as this will hasten the process and once your credit file is clear you then move lenders. I suggest you use a specialist broker at this time as not all lenders have the same criteria and Shaun Vickery from Select or Ryan who both post here would be able to help.

If you do get the IVA settled you could use any extra money to reduce the mortgage balance by voluntarily overpaying. It looks like your current mortgage rate is about 4.6% so reducing your debt would be a better idea than saving the money.