An IVA or Individual Voluntary Arrangement is an agreement between you and your creditors in which you agree to make one payment out of your income each month to help you clear outstanding debts. This payment amount is based on your personal budget, so the amount is manageable for you, and the payments are spread over a fixed period of time. An IVA is useful when you need to prove your ability to make payments to high street remortgage lenders. However, under the terms of an IVA, you agree to contribute as much as possible toward paying off your debts each month. In short, an IVA gives you an opportunity to pay a manageable amount each month in order to pay off your outstanding debts.
With an IVA, your home is protected and your job is not at risk. Despite the fact that your credit rating is affected, you can even apply for a new remortgage, called an IVA remortgage. There are many UK remortgage lenders that will not consider bad credit remortgage applications because of the inherent risk that they will have to take on. However, the subprime remortgage market in the UK is still varied enough that certain remortgage lenders have decided to cater solely to people looking for IVA remortgage or other types of subprime remortgages. These lenders will take a careful look at your financial history and at the progress you're making on your IVA before they offer you an IVA remortgage.
The type of IVA remortgage that you'll be offered depends on how long ago your IVA was cleared and on the amount you're able to offer as a deposit. If you're able to offer five percent or more, you should be in good shape to receive an IVA remortgage. Also, the remortgage interest rate you'll receive is based on similar factors.
Often, with IVA remortgages, your lender will write a clause into the remortgage contract saying that part of your loan needs to be paid back by the equity in your home. Your home will still be yours, but part of the value needs to be used to repay your debt.
Getting an IVA remortgage has some disadvantages. When you have an IVA remortgage, you will need to spread your payments over a longer period of time. If you fail to comply with the terms of your IVA, your home and your other assets may be at risk unless you specifically excluded them from the terms of your IVA proposal. If you default on your IVA payments, the next step is to declare bankruptcy. So getting an IVA remortgage will put even more pressure and strain on your ability to make your regular monthly payments.
If you'd like help finding the best IVA remortgage loan for you, take a minute to fill out our short remortgage form, and a SimplyFinance representative will contact you promptly to introduce you to an IVA remortgage broker. Your remortgage broker will work and search to find the best IVA remortgage deal for you.