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Remortgage with IVA

If you have an Individual Voluntary Agreement (IVA) getting a remortgage in these circumstances could allow you to use your remortgage to help settle your IVA.

Bear in mind that, like bankruptcy, an IVA should be considered a last resort as it could affect you ability to obtain credit in the future. If in doubt, we suggest you seek independent financial advice or visit a debt counsellor.

What is an IVA?

IVAs have been available in the UK since the mid-eighties and are intended as an alternative to bankruptcy. IVAs, unlike bankruptcy, guarantee that you won’t lose your house. While bankruptcy can require you to sell your home to pay off the debt, IVAs will allow you to remortgage it instead, allowing you to remain in the property.  Once an IVA is in place you will be debt free within five years as long as you continue to make regular scheduled repayments to those you owe money to. Once the IVA is finished, you will be considered to be debt free, even though you may not have paid off the full amount you owe. Any debt that’s still outstanding will be written off.

How do I remortgage with an IVA?

Remortgaging towards the end of your five-year IVA can sometimes be a useful way to pay off a percentage of the outstanding debts, using equity in your home. In fact, if you have over a certain amount of equity in your property, you may be required to remortgage in order to help pay off the IVA.

In the last year of an IVA you’ll usually be required to have your property valued in order to ascertain whether or not it has sufficient equity to count towards discharging your IVA debt. Equity is essentially the money held the property, i.e. the profit you’d make from the sale of a property. If the valuation indicated you have £5000 or more in equity, you’ll generally be asked to remortgage in order to put this money towards your IVA repayments. You will not usually be expected to remortgage beyond your existing mortgage term.

If you can’t get a remortgage for whatever reason, you will usually be given the option to make 12 extra IVA payments on top of your original five year agreement.

To find out more about getting a remortgage with IVA, speak to our expert team on 0845 450 9661.

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