What are the implications of an IVA remortgage?

implications of an IVA remortgage

If you are into an Individual Voluntary Arrangement (IVA), then granting of a new mortgage is pretty much unlikely. While you get a few advantages out of an IVA, there are also restrictions that you should likely abide by. One such IVA restriction put on debtors entering into an IVA is that they cannot take out additional loans or credit of more than £500. If you do want to take out a loan or credit exceeding £500, you must get prior permission from your administrative IVA Supervisor. As such, obtaining an IVA remortgage becomes challenging while you are on an IVA, although not restricted. Your credit profile will contribute to whether you can get an IVA mortgage

Reliable IVA debt advice UK suggests that you count on your finances while in an IVA and discuss accordingly as to what are the possible implications of an IVA remortgage. When you plan for an Individual Voluntary Arrangement (IVA) or consider an IVA remortgage, be ready for the consequences that will come through. Before taking any action for IVA remortgage, consider speaking with a debt or an IVA advisor to know about the implications of an IVA remortgage. 

IVA-remortgage

Now, if your debt knowledge is raw, an Individual Voluntary Arrangement, popularly identified as IVA, is an ultimate insolvency debt method to resolve the debtors’ debt affairs. Here, the debtor and the creditors enter a binding contract whereby the former agrees to pay off the debt-money with their best capability and affordability in regular repayments over the IVA duration. The latter agrees to write off the debtors’ debt if any remains after the IVA ends. The debtor can pay off all their unsecured debts in an IVA, excluding their priority debts like mortgages. That’s why getting an implications of an IVA remortgage? is hard. 

An understanding of IVA Remortgage

In layman’s words, remortgage identifies the situation where you try to replace your existing mortgage by getting a new mortgage. People usually opt for remortgaging when they want the mortgage terms to be more favorable with affordable interest rates and better terms. IVA remortgages are authorized and mandated by the court if you are in an IVA. Hence, knowing the implications of an IVA remortgage helps if needed. 

When you enter into an IVA, you can include all your unsecured debts and get rid of them except your mortgages. You have to continue mortgage payments as you usually do. If paying off the mortgage value is unaffordable for you, you can get adjustments to your monthly IVA repayments through your IVA Supervisor. Furthermore, there may be prohibitions to taking a new mortgage in an IVA, but an IVA remortgage is not. 

If you have an ongoing Individual Voluntary Arrangement (IVA) and are also a homeowner, there is likely an equity release clause on your IVA proposal. The Insolvency Practitioner must have taken into account your home property and worked out an equity release clause for you for the IVA remortgage processing. 

The equity release clause in your IVA proposal mandates that you would have put your house for remortgage during the last six months of your IVA tenure and contribute the equity proceeds towards your IVA repayments. This clause is in effect only if your home property’s equity comes off more than £5,000. If the equity value is less than that, there is no requirement for you to get an IVA remortgage. 

Therefore, it is crucial that you thoroughly go through every term of your IVA proposal and if that satisfies you. For any changes in your IVA proposal, you can contact the responsible IVA Supervisor for help. They will provide you with reliable advice on IVA remortgage and the possible implications of an IVA remortgage, considering your circumstances. 

Implications of an IVA Remortgage

While you consider an IVA remortgage, ensure that you carefully assess your credit history and income. If both of them are not up to the critical point, you will not find any mortgage lender for your home with your existing IVA. Regardless, there are some conditions or implications of an IVA remortgage. If you fit those conditions, an IVA remortgage is viable for you. 

  • The debt value secured against your home property should not be more than 85% concerning the current market value. That limits you for an IVA remortgage not exceeding 85% to the current market rate for the property. 
  • You are capable of affording the IVA remortgage’s monthly repayment value. On the other hand, if there is an increase in the mortgage payment, you can get a deduction on your monthly IVA repayments to add up the mortgage payment costs. However, the additional reduction of your IVA contributions will not be more than 50% of your IVA repayments. 
  • The equity value that you will release (disbarring the statutory interest) should not be more than the total value of your unsecured debts. 
  • If the available equity value at the review date is less than £5000, you cannot release your equity. 

Supposing that you have an IVA remortgage facing the implications of an IVA remortgage, they will proportionately deduct any increase in the value of mortgage repayments from the monthly IVA contributions. 

Popular Blog : What is an IVA Proposal ?

If you cannot get an IVA remortgage but have an equity release on your home property, you should talk about it with your IVA Supervisor. They could advise you to continue your monthly IVA repayments for additional twelve months even after the IVA tenure ends. These monthly IVA repayments will be lesser than the equity value, which you cannot release. Nonetheless, the Insolvency Practitioner will set out such terms and amounts in the initial stage of your IVA proposal itself. You enter into an IVA only after you agree to such terms. 

Final words

When you enter into an IVA, your financial situation is already unsatisfactory. So, if you are opting for an implications of an IVA remortgage?, it indicates the deteriorating position of your financial situation. Assessing your circumstances in such times will verify that you are incapable of making the monthly repayments with the existing loan terms or interest rates. Feel free to contact your IVA Supervisor to collect more information on IVA remortgages and how to get one.