Joint mortgage – Can I do an IVA

Joint mortgage – Can I do an IVA

If you have a joint mortgage, you can use an IVA to manage your debt. The other owner of your property and their share of any equity will not affected.

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Can you start an IVA if you have a joint mortgage?

You can start an IVA if you own a property in joint names with someone else. The other joint home owner is not involved. They will not have to sign anything and their part ownership of the property will not change.

Your joint mortgage is not affected by the agreement. The mortgage lender will not be concerned because their debt is not involved. The monthly payments continue as normal.

The only time there could ever be an issue with your lender is if you do not keep up the agreed mortgage payments. However once your IVA has started, you should have sufficient funds allocated in your living expenses budget to ensure this happens.

Being in an IVA will make changing your mortgage at the end of your current fixed deal difficult because your credit rating will be poor. If your current mortgage deal ends during your IVA, don’t worry. You will still have a mortgage. Its just likely you will have to move to your lender’s standard variable rate (SVR).

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.

Will you have to release equity if you have a joint mortgage?

Where you have more than £5000 of equity in your property, you will normally have to sign up to an IVA equity release clause. This is regardless of whether you have a joint mortgage or not.

The clause usually states that you must try to release equity from your property in the 5th year of the Arrangement. Funds raised in this way are used to increase the amount paid back to your creditors.

However, only your share of any equity in the property can be taken into account. The other joint owner’s share is not at risk. You can never be expected to release money from their share.

In reality, the fact that you have joint mortgage will mean that you are unlikely to be able to re-mortgaging in year 5. This is because the other joint mortgage holder would have to agree – which us unlikely.

As such it is most likely that your IVA will be extended by an additional 12 months payments instead.

Can the other owner be forced to remortgage or sell the property?

You are bound by the terms of your IVA. However, the other joint mortgage holder is not involved or bound in any way to the agreement.

This means they cannot be forced to agree to any re-mortgage in the 5th year. As a result, remortgaging to release equity is unlikely to be required. Instead your IVA payments will be extended for an additional 12 months.

The IVA solution is designed to protect your property. If you do not maintain the agreement for any reason, it could fail. You will then be left to manage your outstanding debt in a different way. However it will not result in you having to sell your property.

The only time your property is likely to be at risk is if you fail to keep up the mortgage payments or you are made bankrupt.

It would be extremely unlikely for your creditors to make you bankrupt if your IVA fails (unless a specific clause to the contrary was written into the original agreement).

Thinking about starting an IVA but have a joint mortgage? Give us a call (0800 011 4712) or complete the form at the bottom of this page. The advice is fee and confidential.

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