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What is an IVA?

IVAs and mortgages

One of the main benefits of an IVA is that your mortgage payments are treated as a 'priority debt' and therefore come before payments to the rest of your creditors.

Payments under your IVA are calculated on your disposable income. This is the money that you earn each month that is not used for essential living expenses, including mortgage payments.

So long as you continue to make your usual mortgage payments, an IVA will not affect your mortgage.

If you have a mortgage and are considering an IVA there are a few things to bear in mind:

If you fail to fulfil your obligations under your IVA you risk bankruptcy and your home may be at risk.
There will be a clause in your IVA proposal which states that a proportion of any additional income you receive during the life of the IVA must be paid into the IVA for the benefit of creditors. This could restrict your ability to reduce the size of your mortgage during the life of the IVA.
When you have equity in your home (that is the sale value exceeds the outstanding mortgage and balances to other secured creditors) creditors expect a proportion of this equity, usually about 75%. This normally takes place when you are in a position to re-mortgage your property to release the capital. It could be as early as three years after signing your IVA.

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