Many individuals are unaware of the difference between an ecured loan and an IVA, but both are ways to deal with debt and reclaim the equity in your home. The main difference between an IVA and an ecured loan is that an IVA requires you to keep at least 15% of your home’s value, and you must obtain a mortgage with a maximum balance of 85% of the market value of your property. This is a significant difference, and it is important to know the differences between the two types of IVAs and what they entail before you start your IVA.
There are several advantages to a secured loan, not least of which is the fact that it is considerably cheaper than a remortgage. One of the most compelling arguments for a secured loan is that the IVA can be completed in as little as four to six months. Moreover, a secured loan is much more affordable than a remortgage, and most people undergoing an IVA have a normal mortgage rate. Secured loans also have many other advantages, such as not requiring a court appearance.
Secured loan lenders benefit from security because it helps them balance the risks of default. The collateral can be used to recover the loan if the borrower fails to make the repayments. Typically, an IVA will treat a secured loan as a priority debt. You will be given a monthly allowance to make the payments on your secured loan. While your secured loan payments are covered by your IVA, they may not be sufficient to cover the entire debt.
When considering an IVA, it is important to remember that your creditors must be willing to accept the proposal. In order to be approved, your proposal must be accepted by at least 75% of your creditors ‘by value’. Obviously, your creditors will try to get as much as they can out of the IVA – but the most expensive creditors will usually vote against it. Once this threshold is met, creditors may haggle over the terms of the IVA. They may want to borrow more money, include assets, or extend the timeframe for payment.
Getting an ecured loan IVA is not as straightforward as you might think. The most difficult part of the process is getting started. You will have to contact your creditors and explain that you are taking out a loan to settle an IVA. Then, the IP will ask you to meet with them and discuss your situation. The IP may propose a variation meeting with you. This meeting is usually scheduled when you want to make changes to the terms of the IVA.
An IVA will also work well if you have multiple types of debts, such as unsecured loans and multiple creditors. A secured loan is the best option for people with significant amounts of unsecured debt and multiple creditors. For example, if your debt is too large to qualify for an IVA, you could sell your home and get the full amount of money. In addition, you could pay off your debt after you’ve sold your home.