MoneyHelperThis is one of the biggest worries for homeowners considering an IVA, so let's answer it plainly: an IVA is specifically designed to help you keep your home. Unlike some other debt solutions, an IVA does not force you to sell your house. In the great majority of cases, homeowners stay put and carry on with their normal mortgage payments throughout.
That said, if you have equity in your property, you may be asked to release some of it later in the arrangement — usually in year five. Even then, the aim is to unlock a share of your equity for your creditors, not to take your home away from you.
The short answer
- An IVA is designed to let you keep your home — you're not required to sell it.
- You carry on paying your mortgage as normal throughout the arrangement.
- If you have equity, you may be asked to release some in year five, typically by remortgaging.
- If you can't remortgage, the IVA is usually extended by up to 12 months instead.
- This is very different from bankruptcy, where your home can be at greater risk.
How your home is treated in an IVA
When your IVA is set up, your home is considered as an asset, and specifically the equity in it — that's the difference between what your property is worth and what you still owe on the mortgage. Your ongoing mortgage payments are treated as an essential cost and built into your budget, so you keep paying them just as you did before. This is one of the reasons an IVA appeals to homeowners; you can read more in our guide to getting an IVA as a homeowner.
The year-five equity release step
Most IVAs include a clause about equity, and it typically comes into play towards the end — usually around the fifth year. At that point, your IP will look at how much equity you have. If there's a meaningful amount, you may be asked to release a share of it for your creditors, most often by remortgaging your home. We explain this stage in detail in our guide to equity release in year five.
What if I can't remortgage?
This is where many homeowners feel reassured. If you're unable to remortgage — because you can't get a suitable deal, or the borrowing wouldn't be affordable — you don't lose your home. Instead, the usual outcome is that your IVA is extended by up to 12 months, with those extra payments standing in place of the equity you couldn't release. You keep your house; the arrangement simply runs a little longer.
How much equity counts?
Whether you'll be asked to release equity depends on how much you have. Property values and mortgage balances change over time, so the position is only really settled when year five arrives. Some homeowners have little or no equity and are never asked to release any. The exact terms are set out in your IVA proposal, so it's always worth reading that carefully and asking your IP anything you're unsure about.
Factors that affect the picture
- Your property's value at the time of the review.
- How much of your mortgage you've paid off.
- The remortgage deals realistically available to you.
- Whether new borrowing would be genuinely affordable.
See which debt solutions you could qualify for. Checking your options won’t affect your credit score.
How this compares with bankruptcy
The contrast with bankruptcy is a big reason homeowners often prefer an IVA. In bankruptcy, your assets — potentially including your home — come under the control of a trustee, and there's a greater chance your property could be sold to pay creditors. An IVA keeps you in control of your home. If you're weighing the two up, our guide comparing whether an IVA is better than bankruptcy lays out the differences.
What if I fall behind during the IVA?
Keeping up your mortgage is essential to protecting your home, so if your income drops, deal with it early. There are options if you can't keep up your IVA payments, and staying in touch with your IP is always the safest move. Bear in mind too that an IVA will affect your credit rating while it runs, which can influence the remortgage options available to you later.
How IVA Advice Online can help
If you own your home and you're worried about what an IVA would mean for it, we can explain exactly how your equity would be treated in your circumstances — clearly and without jargon. To talk through your options, get in touch. There's no charge for an initial assessment of your options, and we'll only mention a fee if you choose a solution that carries one.