IVA equity release rules – 2025 guide

11/04/2025
IVA equity release rules – 2025 guide

Get clear guidance regarding whether you will need to release equity from your property during your IVA. If so, the amount you will have to release.

Included in this article: 

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Key IVA equity release facts for homeowners

The IVA is the only debt solution available in England and Wales that provides legal protection for your home. Once the agreement is in place, your creditors can’t force you to sell. In addition, they can’t attempt to secure their debt against your property.

If you have no equity, it is likely that your property will not form part of your IVA. But where you do, you will be expected to attempt to release some of it as part of the agreement.

Where equity release is required, is normally by way of either re-mortgage or secured borrowing. This happens in the 54th month of a standard 60 month agreement.

Struggling to get your head round all of this? We can help. Call us (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

What if there is no equity in your property?

For the purposes of an IVA, the amount of equity in your property is calculated using 85% of its current market value. So if it is currently worth £200,000, the value used in the IVA calculation will be 85% of this or £170,000.

Based on this value, if your share of any equity is less than £10,000, it is considered that you have no equity in your property. In these circumstances, you will not be required to release equity during the Arrangement and your property is exempt from the agreement.

This is the case even if house prices rise while your IVA is in place. It will be based on monthly payments only.

This is an updated rule within the IVA protocol 2025.

The rules highlighted in this article only apply to protocol compliant IVAs. You must check your IVA terms and conditions before you sign to make sure you are happy with the agreement.

The rules if you do have equity in your property

For IVAs that started before April 2025

For most IVAs, where your share of the equity in your home is greater than £5,000 (based on 85% of the market value) one or other of the two following scenarios will apply:

Your IVA will last for 6 years (72 months) with no further requirement to release equity if:

  • The total secured borrowing required to raise equity would rise above 45% of your total household earned income (from salary, self-employment and pensions).
  • The surplus income you pay into the IVA is £100 or less when it is drafted and agreed.
  • Where you are aged above 60 at the start of the agreement.

When the above do not apply, the length of the agreement will be 60 months. However, you will have to agree to attempt to release equity as part of the deal.

In this case, your property must be valued again in the 54th month of the Arrangement. If you are unable to release available equity at that time, the number of payments will be extended to 72 months. Once these are paid, the IVA will be completed.

Where you are able to release equity, this will have to be paid into your agreement. The amount you will have to raise is limited. The additional cost of any new mortgage or secured borrowing can’t be more than 50% of your IVA payment. The mortgage term can’t extend any longer than your existing mortgage or past your state retirement age.

For IVAs that started after April 2025

In April 2025, the requirement to release equity from a property was removed from most new IVA agreements. This is under the rules laid out in the IVA Protocol (introduced April 2025).

As a result, if your IVA starts after April 25, you will be unlikely to have to release equity from your home. The following provisions will apply:

  • If your share of any equity in the property (based on 85% of the market value) is less than £10,000, then it will be ignored. The property is excluded from your proposal and it should last a standard 5 years.
  • If your share of the property equity (based on 85% of the market value) is £10,000 or more, the property is still excluded from the IVA, but the length of the agreement will be extended to 72 months.

It is important to understand that not all IVAs will follow the rules as above. There are still some instances where you will need a bespoke (non Protocol compliant) IVA. If this is the case, it is likely that a requirement for you to release equity release will be included. Examples of these are:

  • Where you have a considerable amount of equity in your home.
  • If you are self employed with trade creditors and/or HMRC debt.
  • Where you own investment properties over and above your main home.

Want more advice about IVA equity release? Give us a call (0800 011 4712) or complete the form at the bottom of this page. Its free and confidential.

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10 thoughts on “IVA equity release rules – 2025 guide”

    Kristel says:
    30/11/2021 at 11:41

    I want the property and mortgage on my own my ex husband is in the Iva if I remortgage and pay the Iva his equity in the property can the Iva sign the house to me

    Reply
      James Falla says:
      30/11/2021 at 11:53

      Hi Kristel

      If both you and your ex agree that you should become the sole owner of the property, simply paying his IVA company a lump sum will not achieve the result you want.

      The only way to move the property into your name will be to remortgage so that the new mortgage (and property deeds) are in only your name. Both parties will have to agree to this. He will have to sign the deeds over to you.

      As part of the agreement, you are right, you will have to pay his share of any equity to his IVA. This would mean that his IVA company would then remove the restriction they are likely to have placed on the property.

      Reply
    Kristel says:
    30/11/2021 at 12:04

    Hi James
    Thank you for your reply
    What if I pay the Iva his equity and he still refuses surly they wouldn’t take my money if this is the case?
    I thought he would have to sign as I’m paying his equity?

    Thanks

    Reply
      James Falla says:
      30/11/2021 at 12:07

      Hi Kristel,

      You will not be able to do anything unless your ex agrees. You can’t get the property in your name alone without his signature…. So, I strongly advise not to do anything until you have reached that agreement with him. You might need to get a solicitor to ensure the agreement between yourselves is drawn up correctly. Only then can you start thinking about getting the mortgage changed and paying his equity to his IVA.

      Reply
    Sharon W says:
    14/01/2022 at 12:51

    Hello just wondering if you could help me.. when I come to the end of my iva my ex partner as refused to remortgage we would only have a couple of years left on the mortgage what would the iva do about this.. any information would be greatly appreciated

    Reply
      James Falla says:
      14/01/2022 at 12:54

      Hi Sharon

      In these circumstances, the IVA company should agree that remortgaging is not possible. At the end of the day they can’t force a joint owner to remortgage. As such they should extend your monthly payments for a further 12 months instead (i.e. without the need to remortgage). However you would need to double check this with your IVA company.

      Reply
    Sarah P says:
    14/02/2023 at 15:15

    Hi, I jointly own a house with my ex partner who has refused to sell for the last two years. She has now told me she has taken an IVA out against the whole registered estate of the property. Is this something she can do ?

    Reply
      James Falla says:
      14/02/2023 at 15:24

      Hi Sarah

      If the property in question is jointly owned, then your share remains owned by you regardless of whether the other party starts an IVA or not. If they have done so, their IVA can only ever have an impact on their share of the property. It can never include 100% of the equity unless the individual owns 100% of the property.

      Put another way, if the property was ever sold, you would still receive your rightful share of any equity released regardless of the fact that the other party has an IVA.

      Reply
    Simon says:
    15/07/2023 at 12:48

    Hi,
    Can you please help,
    I am currently in the middle of an IVA agreement, almost 3 years in, can I attempt to get equity out of my property and pay the IVA in full at any time? Or is it a case of just making the monthly payments for the full 5 year term? Also at the end of 5 years I’m confused as to what happens next, can you please explain this?

    Regards
    Simon

    Reply
      James Falla says:
      17/07/2023 at 18:08

      Hi Simon

      In theory it is possible to remortgage your property to release sufficient equity to pay off your IVA early at any time.

      If you are interested, you should first speak to your IVA company and confirm with them the amount you would need to raise. Once this is established, you can review whether it is possible (and economically sensible) to release the funds from your home.

      Remember, given you are in an IVA, your credit rating will be poor. As such, the only way to raise funds through a mortgage will be with a sub prime lender which will almost certainly mean swapping your current mortgage to a more expensive rate.

      You can read more about releasing money from your home to settle an IVA early here: Is it possible to pay an IVA early?

      Reply

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