What An IVA Remortgage Can Do For You
If you think an IVA remortgage might be your ticket out of debt, then you are certainly not alone. An IVA remortgage might be just what you need to get your finances straight. But before we explain how to do that, let's take a look at who might need an IVA remortgage.
An IVA remortgage is intended for people who have taken out individual voluntary arrangements (IVAs) to manage their debt situation. Taking out an IVA is one way of avoiding being made bankrupt. With an IVA a debtor reaches a payment arrangement with creditors. In order for an IVA to work creditors who represent 75 per cent (by value) of the debt must agree to the IVA. Once this is done, the IVA allows the debtor to pay a specific sum towards debt repayments every month for up to five years. After that time, the debt is regarded as satisfied.
Once you've had an IVA, it will be difficult to get a mortgage from high street lenders, who lend mostly to prime applicants. Instead, you might have to go for an IVA remortgage which is a sub prime or adverse mortgage. This is because the people who take these mortgage products have had credit and debt problems. So why should you consider an IVA remortgage?
Well, if you still have debts to repay an IVA remortgage could help you to free up the equity in your home to repay those debts. Let's face it, you're not doing anything else with the money, and if your home is one of the thousands that have appreciated in value in the last few years,
it makes sense to free up that money with an IVA remortgage and take the first step to becoming debt free.
Applying For An IVA Re Mortgage
In many ways an IVA re mortgage is like any other remortgage product. You have to apply to the lender for an IVA remortgage and you have to meet the lender's criteria. This might have to do with the length of time for which the IVA has been satisfied and there may also be conditions relating to mortgage arrears. Most lenders who provide an IVA re mortgage will expect that applicants' mortgage arrears will be at least three months in the past and some IVA remortgage lenders stipulate even longer periods.
An IVA remortgage is likely to cost you more than a standard remortgage product, because of the increased risk to lenders. That means that the interest rate will be loaded - or raised - by a couple of percentage points. But don't worry; there are two pieces of good news. The first is that you can use a broker to find the best rate on your IVA remortgage deal. The second is that you don't have to keep that remortgage forever. In fact, once you have straightened out your finances and have paid your mortgage properly you should be able to move to a better deal. And that's the key thing - use your IVA remortgage to make your financial life better. That means paying off the debt with the equity you raise through the IVA remortgage.
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