If you're a homeowner in an IVA, you may have heard about the year-5 equity release step, where you're asked to try to remortgage near the end of your IVA to release money for your creditors. For many people in IVAs that started before July 2025, this is still part of their terms.
The rules changed with the 2025 IVA Protocol. New protocol IVAs from 1 July 2025 don't include an equity release step at all. This guide explains how the older clause works, the limits that apply, what happens if you can't remortgage, and what's different now.
The short answer
- Older IVAs (usually before July 2025) often ask you to try to remortgage in year five to release equity.
- You're usually asked to release equity above 85% of your home's value, after your mortgage.
- If you can't remortgage, the IVA is usually extended by up to 12 months instead.
- New IVAs under the 2025 Protocol have no equity release. Equity of £10,000 or more means a six-year IVA instead.
- You won't lose your home because you can't get a remortgage.
Which rules apply to you?
| Older protocol IVAs | 2025 Protocol IVAs | |
|---|---|---|
| When | Usually set up before July 2025 | New protocol IVAs from 1 July 2025 |
| Remortgage needed? | Usually asked to try, towards the end of the IVA | No |
| Effect of equity | Equity above 85% of value may be released for creditors | Sets the length: under £10,000 is 5 years, £10,000 or more is 6 years |
| If you can't remortgage | Usually up to 12 extra months of payments | Not applicable |
Your own IVA terms decide which applies. Some IVAs don't follow the Protocol and may have different wording, so check your proposal or ask your insolvency practitioner.
How the older year-5 equity release works
Under the standard terms used before 2025, your insolvency practitioner reviews your home's value towards the end of your IVA, usually during year five. If there's enough equity, you're asked to try to remortgage, or take a secured loan, to release some of it. The money raised is paid into your IVA for your creditors.
The amount is usually based on the equity above 85% of your home's value. Your mortgage, any secured loans and early repayment charges are deducted first. Keeping 15% of the value outside the calculation allows for costs and gives you a buffer.
The limits that usually apply
- Small amounts don't count. If the equity you could release is under £5,000, you're not normally asked to remortgage.
- Affordability is protected. Any increase in your monthly mortgage cost shouldn't be more than half your monthly IVA payment.
- The term is limited. New borrowing shouldn't run beyond your existing mortgage term or state pension age, whichever is later.
- Creditors can't be overpaid. They can't receive more than the debts owed plus the IVA fees.
Joint owners
If you own your home with someone else, only your share of the equity is used. Where both partners have their own IVAs, each calculation is based on that person's share. See joint IVAs for couples.
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What if you can't remortgage?
Many people can't get a remortgage while they're in an IVA, because there isn't enough equity, their credit file makes lenders cautious, or the payments wouldn't be affordable. That's expected, and it doesn't mean you'll lose your home.
Under most older terms, if you can't release equity the IVA is simply extended by up to 12 months, and you carry on with your normal monthly payment for that extra time. If you complete the IVA, your remaining qualifying unsecured debts are written off in the usual way. Our guide to remortgaging during an IVA covers the practical side.
What changed in 2025?
The Insolvency Service published a new IVA Protocol in 2025, and all new protocol IVAs from 1 July 2025 must follow it. Under the new rules, your family home doesn't form part of the IVA. Instead of a remortgage near the end, your equity is assessed at the start:
- If your share of the equity is under £10,000, your IVA usually lasts five years.
- If it's £10,000 or more, it usually lasts six years.
There's no equity release step and no extra year added because of a remortgage. You can read the official summary in GOV.UK’s IVA key facts, and our guide to IVAs for homeowners includes a worked example.
If you're coming up to year five now
If your IVA started under the older rules and your equity review is approaching, it's worth:
- Checking your terms, so you know exactly what your IVA says about equity.
- Asking for the figures your insolvency practitioner is using, including the valuation and your mortgage balance.
- Telling them about any changes in your income, health or household, as these can affect what's affordable.
- Asking whether a variation is possible if your circumstances have changed significantly. Any change to your IVA terms has to be put to your creditors.
The equity review links in with your IVA annual review, so keeping your practitioner up to date throughout helps.
Common questions
Do I still have to release equity in year 5 of my IVA?
It depends on when your IVA started and which terms it follows. IVAs set up under the 2025 IVA Protocol, which applies to new protocol IVAs from 1 July 2025, don't include an equity release step. Many IVAs that started earlier do. Check your IVA terms or ask your insolvency practitioner.
How much equity do I have to release in an IVA?
Under the older protocol terms, you're usually asked to release equity above 85% of your home's value, after your mortgage and secured loans are deducted. If the amount you could release is under £5,000, a remortgage isn't normally required.
What happens if I can't remortgage in year 5?
Under most older IVA terms, if you can't remortgage or release equity, your IVA is usually extended by up to 12 months of payments instead. You won't lose your home because you can't get a remortgage, and your qualifying debts can still be written off when the IVA completes.
Can the remortgage make my mortgage payments unaffordable?
There are limits. Under the standard older terms, any increase in your monthly mortgage cost shouldn't be more than half of your monthly IVA payment, and the new borrowing shouldn't run beyond your existing mortgage term or state pension age, whichever is later.
Does the 2025 IVA Protocol apply to my existing IVA?
The 2025 Protocol applies to new protocol IVAs. If your IVA started before then, its own terms decide what happens. If your circumstances have changed, your insolvency practitioner may be able to propose a variation to your creditors, so it's worth asking.
How do I know if my IVA has an equity release clause?
Check your IVA proposal and the terms your creditors approved. Your insolvency practitioner should also contact you well before any equity review is due. If you're unsure, ask them to confirm in writing.
How IVA Advice Online can help
If you're thinking about an IVA as a homeowner, we'll explain how the current rules would apply to your property and which debt solutions you could qualify for. To talk through your options, get in touch.