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How will my House be affected if I do an IVA?
Money Advice, Debt Advice & Debt Help

How will my House be affected if I do an IVA?

How will my House be affected if I do an IVA?

There are various implications for your house if you start an IVA. It is legally protected from your creditors. However you may have to release equity.

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What will happen to my house if I do an IVA?

An Individual Voluntary Arrangement (IVA) will protect your property from your creditors. Will you have to release any equity from your property? What happens to any money you are able to release? To find out more please visit:

What happens to your House in an IVA?

If you own a house or any other property you should be able to continue living there when you start an IVA. The mortgage is not included in the Arrangement and your mortgage lender is not normally told.

You will be able to keep paying your mortgage. A sufficient amount will be included in your Living Expenses budget to allow you to do this.

The Arrangement will actually help protect your property from your unsecured creditors. Any you include are no longer allowed to try and secure their debt against your property by applying for a Charging Order.

Starting an IVA may not prevent a Charging Order being issued if the Court has already granted an Interim Charge against your home.

Will you have to release equity from your House during an IVA?

One of the conditions of your IVA will always be that you agree to try and release equity from your property. Any money you raise in this way must be paid into the Arrangement for the benefit of your creditors.

You will normally have to get a valuation of your house on or around month 54 of the Arrangement. If there is equity in the property at that time you will be obliged to try and release some of it either by remortgaging or with a secured loan.

The equity is calculated using a specific rule. That is that only 85% of the property’s true value is taken into account. You are always allowed to keep at least 15%. As such based on 85% of the value if there is equity of £5000 or more you will need to try and release it.

If using 85% of the true value the equity in your house is less than £5000 you are not obliged to release anything. The Arrangement will end as normal after your last standard payment has been made.

What if you cannot Remortgage your House during your IVA?

You will be required to try and release equity from your property by either remortgaging or with a secured loan. However there are strict rules to protect you in regard to how much extra you can borrow.

Firstly the payments you make towards any secured debts (either your mortgage or a secured loan) cannot increase by more than 50% of your current monthly IVA payment. Secondly the number of payments cannot extend beyond your retirement age or the length or your current mortgage term.

Given these rules and the fact that your credit rating is poor it may not be possible to borrow any more money against your house. If this is the case your obligation to release equity ends. However instead you will have to extend your IVA payments by an additional to 12 months.

If your house is in negative equity when you start your IVA do not rely on this situation remaining the same. House prices could during the Arrangement. If equity appears you may then have to try and release it in year 5.

How is a jointly owned Property affected by an IVA?

If your house is owned in joint names only your share of any equity in the property can be considered. The other owner can never be forced to release any of their equity to help repay your debts.

Given this if there is equity in the property based on the 85% valuation rule you would only ever have to try to release your share of this during your IVA.

The only time this is not the case is if both you and the other joint owner start an IVA together. In these circumstances all the home equity can be considered.

If you and your partner jointly own a property think carefully before starting a joint IVA. If one party’s debts are relatively small it might be worth them using a Debt Management Plan so their equity is not considered.

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    8 thoughts on “How will my House be affected if I do an IVA?

    1. John says:

      I am considering an iva but im worried about the house. I am not on the mortgage or deeds to the house what would happen in this case?

      1. Hi John

        If your name is not on the deeds or the mortgage then whether or not you have an interest in the property you live in will depend on whether you are married to the owner and whether you have contributed to the mortgage or material improvement to the property.

        Having said that generally speaking where an IVA is concerned you can normally argue that you have no interest. However you need to be mindful that if you were to split from your partner / spouse at a later date they will be able to point to your IVA when arguing you have no interest in the property.

    2. Pat says:

      I finished my iva on 9 febuary after 6 year term. Not got certificate yet. My husband may have to relocate us for a new job which would meen selling our home. My worry is would we have to pay equity to iva if we have not got certificate.

      1. Hi Pat

        Your IVA still exists until you have got your completion certificate (even though you have finished making the required payments). If you sell your house before you have the certificate your share of any equity released will still be treated as a windfall and would have to be handed to the IVA company.

        Given this you MUST NOT enter into any agreement to sell your house until you have your completion certificate in your hands. Normally this will take about 3 months from the date you made your last payment into the Arrangement. I would contact your IVA company straight away and start asking them when you are likely to receive it.

    3. Nasar ali says:

      I had debt of £20000 on my name from credit cards and can’t afford to pay back now due to my health condition with won’t let me work many hours now.

      I bought a house in September 2018 and borrowed money from my brother £48000 as the house don’t have mortgage on it I was bound to pay my brother back £200 month but could not afford it. Then my Mrs said to me and my brother she will pay him £200 for next 24 months and then remortgage the house and pay the rest of the money but house has to on her name because she is going to pay for the house so she wanted to be legal owner me and my brother both agreed to it.

      Now it’s in process of being transferred to her name as a gift from my name to her because this way solicitor fees will be only £280 other wise it will cost in thousands. Now my question is as soon the house gets on my wife’s name then if I apply for Iva will that effect my Mrs house or creditors might say why u gifted house to your Mrs

      1. Hi Nasar

        It is difficult to answer your question without having more information. You say you borrowed £48,000 to buy this property and there is no other mortgage. What is the market value of the property? Was it worth just £48,000 when you bought it in Sept 2018. This seems a very low amount….

        The problem is if the house is worth more (say £100,000) and you simply give it to your wife this would be a transaction at undervalue. Doing this may then prevent you from starting an IVA without accepting that you do still have an interest in the property.

        If you can provide more information about the current value of the property and exactly how many payments of £200 you made to your brother before your wife took over I will advise further. Alternatively please give me a call (0800 077 6180) and I would be happy to discuss it with you.

    4. Rachal says:


      My husband and myself are coming to the end of our iva and are in the process of our iva company sorting out a remortgage to pay off remainer of debt. If we are accepted do we have to go ahead with the remortgage or can we carry on another year with our regular payments to the iva

      1. Hi Rachal

        If you are able to release equity by remortgaging then the terms of your agreement will almost certainly say that you have to take this option. You cannot choose the extra 12 months extension.

        Remember as highlighted in the above article you only have to attempt to remortgage if there is more than £10k of equity (given you are both in the IVA) based on 85% of the market valuation.

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