You may be able to remortgage to pay money into an IVA, or to offer your creditors a lump sum that ends it early, but you usually need your IVA supervisor’s agreement first, and a lump sum offer only works if creditors accept it. Many homeowners are asked to try anyway, because many IVAs include an equity release clause, often in the final 6 months. Whether a lender will offer a remortgage depends on your equity, affordability and credit history, and it is not guaranteed.
This page goes deeper than our main page on remortgaging during or after an IVA. If you live in Scotland, see bad credit remortgages in Scotland, because a protected trust deed works differently.
On this page
This page covers
- Credit issue
- Individual voluntary arrangements (IVAs)Usually stays on your credit file for 6 years from the start date.
In short
- Many IVAs require you to try to release equity, often in the final 6 months and commonly up to an LTV limit in the terms.
- If a remortgage is not possible, many IVAs are extended instead, often by up to 12 months.
- A lump sum full and final settlement usually goes to a creditor vote and may be turned down.
- Securing more on your home carries real risk, so speak to your supervisor and a free debt adviser first.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
How can a remortgage be used to pay off an IVA?
People usually mean one of three things, and they work differently. In every case the IVA stays on your credit file for 6 years from its start date, however it ends.
| Situation | What happens | Who decides |
|---|---|---|
| Meeting an equity release clause | You try to raise money against your home and it is paid into the IVA | Your IVA terms set the rules, and a lender decides whether to lend |
| Offering a full and final settlement | You raise a lump sum and offer it to end the IVA early | Usually your creditors, who vote on the offer |
| Remortgaging after completion | The IVA has ended and the remortgage is for a new deal | The lender only |
A general guide to IVAs in England, Wales and Northern Ireland. Check your own IVA terms or ask your IVA supervisor.
What does an IVA equity release clause usually say?
Many IVAs for homeowners include a clause requiring you to try to release equity, often in the final 6 months. The wording varies, but these points come up often:
- An LTV limit. Many clauses only expect you to borrow up to a set percentage of your home’s value. The figure varies, and a lender’s own limit may be lower.
- A minimum amount. Some IVAs say no release is expected if the equity available is small.
- What counts as trying. A lender’s decline, or an adviser’s view that a remortgage is not available or affordable, is often the evidence a supervisor asks for.
- If it is not possible. Many IVAs are extended instead, often by up to 12 months, with contributions continuing.
Checking your figures early, for example with our bad credit remortgage calculator, gives you more time before the review.
Can you offer a lump sum to settle your IVA early?
A full and final settlement is a lump sum offered to end the IVA before its planned end date. The money might come from a remortgage, family or savings. Your supervisor usually puts the offer to your creditors, who vote on it. Acceptance is not guaranteed, and creditors may ask for more.
- Ask your supervisor how a settlement would work under your terms, and what you could realistically raise.
- Get your supervisor’s agreement before applying, and ideally the creditors’ answer before committing.
- If creditors accept, the lump sum is paid, the IVA ends and your supervisor issues a completion certificate.
The IVA leaves the Insolvency Register 3 months after it ends, but settling early does not shorten the 6 years on your credit file.
How may lenders view a remortgage during or at the end of an IVA?
A remortgage to meet an equity clause or fund a settlement happens while the IVA is active. Fewer lenders consider that, and those that do may want your supervisor’s written consent and confirmation of where the money is going. Rates are often higher than high-street rates.
Lenders are also likely to look at defaults on the accounts in the IVA, explained on our defaults page, and at your mortgage record. Your current lender may consider a further advance, which can avoid early repayment charges, but your supervisor still needs to agree.
Costs, risks and where to get advice
Releasing equity means borrowing more against your home. Your payment is likely to rise, the term may be longer and you could pay more in total. Your home may be repossessed if you do not keep up repayments, and fees and early repayment charges may apply. Get any agreement from your supervisor or creditors in writing.
Your IVA supervisor is the first person to ask about your terms. Free, impartial advice is also available from MoneyHelper, StepChange and National Debtline. If equity is tight, see our guide on remortgaging with little equity, and for borrowing to clear debts outside an IVA, see debt consolidation with bad credit.
What may affect a remortgage to pay into or settle an IVA
| Factor | Why it matters |
|---|---|
| Your IVA terms | The equity clause, LTV limit, timing and rules on new credit set the framework. |
| Supervisor consent | Lenders that consider an active IVA are likely to want it in writing. |
| Stage of the IVA | During the IVA, lenders see an active arrangement. After completion, consent is no longer needed. |
| Equity available | Your home’s value minus your mortgage, and only your share of it if you own jointly. |
| Loan to value | The IVA’s own LTV limit and a lender’s limits both cap what can be raised. |
| Mortgage payment history | Keeping your mortgage up to date through the IVA is one of the strongest points in your favour. |
| Income and affordability | Lenders stress test the higher payment, including IVA contributions while they continue. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- A copy of your IVA terms, including the equity or property clause
- Your IVA start date, expected end date and supervisor’s details
- Any letter from your supervisor about an equity review, extension, settlement or consent
- Your mortgage balance, deal end date, any early repayment charges and an estimate of your home’s value
- Details of any joint owner and whether they agree to the remortgage
- Proof of income and your monthly budget, including IVA contributions
Frequently asked questions
What happens if no lender will offer me a remortgage during my IVA?
Many IVAs are extended instead, often by up to 12 months, with contributions continuing. Your supervisor may ask for evidence that you tried, such as a decline or an adviser’s assessment. Check your own IVA terms, as some handle this differently.
Can a family member help me settle my IVA instead of remortgaging?
Sometimes. A lump sum from family can be offered as a full and final settlement in the same way as remortgage money, and creditors still decide whether to accept. It avoids securing more on your home.
Will releasing equity end my IVA straight away?
Not necessarily. Under an equity clause, the money is paid into the IVA, which often continues to its planned end. It only ends early if creditors accept a full and final settlement, or your terms treat the payment as clearing what is due. Ask your supervisor.
Can I remortgage to pay off my IVA if my home is jointly owned?
It may be possible, but everyone on the mortgage and the title has to agree and be part of the application. Usually only your share of the equity is relevant to the IVA, and a joint owner may want independent advice first.