IVAs and homeowners: what happens to your property
You do not lose your home in an IVA — that is its main advantage over bankruptcy. Costs, risks and what actually happens, explained without the sales pitch.
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How equity is assessed
Your beneficial interest is the market value of the property, less the outstanding mortgage and any other secured charges, less the share belonging to anyone else with an interest. If you own jointly with a partner who is not in the IVA, only your share is in scope. The valuation is normally taken in year five, not at the start, which means rising house prices during the term can increase what is expected of you.
How your beneficial interest is calculated
Take 85% of what the property is worth, then subtract the mortgage and any other secured borrowing. What is left is the equity, and your beneficial interest is your share of it. The 15% haircut stands in for the costs of sale. Where a valuation is given as a range, the mid-point is used, and the Nominee verifies your figure rather than commissioning a survey.
On a jointly owned home each person is assessed separately, and the £10,000 threshold applies to each individual share — so two joint owners can easily land on different terms from the same property.
If a firm suggests a secured loan, stop
The Protocol does not require you to borrow against your home, and it never did require a secured loan. If anyone proposes a second charge or a consolidation loan to fund an arrangement, that converts unsecured debt into debt secured on your property and puts the home at risk in a way the IVA itself does not. Take independent advice before agreeing to anything of the sort.
If you are in negative equity
Then your beneficial interest is nil, the £10,000 threshold is not met, and the term is proposed at 60 months. The home is excluded and there is no further review of its value once the arrangement is in force.
If your equity is very high
The Protocol says a protocol IVA is unlikely to be appropriate where a family home holds very high equity, and the same goes for anyone with an interest in more than one property or a buy-to-let. In those cases a bespoke IVA or a different solution should be considered instead. If a firm pushes a protocol IVA at you anyway, that is worth questioning.
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Common questions
Can my partner be forced to sell?
No. An IVA does not give anyone the power to force a sale of your home. That is the crucial distinction from bankruptcy, where the trustee takes your beneficial interest and can apply to court for an order for sale. In an IVA you remain the owner throughout.
What if I want to move house during an IVA?
You need your supervisor's agreement, and it is not automatic — moving normally involves selling, which realises the equity the arrangement is interested in. It can be done, particularly where you are moving to something cheaper for genuine reasons, but plan it with your supervisor early rather than after you have made an offer.
Related guides
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