Secured Loans and IVA
A property owner having a home or any other property worth mortgaging can have a secured loan if the market value of the property is more than the amount of debt owed on it. The excess of the market value above the amount of debt outstanding on the property is known as equity and this equity can be released to obtain a secured loan, which can be used to settle a problematic debt. Under this arrangement, all the outstanding debts are brought under one umbrella and the monthly payments are linked to this loan and in that sense it is like a consolidation loan.
The secured loan can be obtained even if one is under IVA; though obtaining a secure loan under IVA at reasonable rate of interest is quite difficult. However, due to presence of specialized brokers in the market, a bargain on the interest rate can also be made resulting in quite cheaper alternatives. Sometimes, while one is still under IVA, it is possible to get secured loans at lower interest rates. However, it is essential that the fine prints are carefully read, because the extra charges may ultimately result in a much higher interest rate than it appears on the quote by brokers. The cost involved in the process may include financial charges, like the fee charged by the broker or the financial advisor, as well as the less tangible charges, for example, the time and energy put in by the potential borrower along with the stress and uncertainties involved in the entire process. The bottom-line is that higher the risk the lender is taking in extending the loan, higher will be the interest charged. The interest rate that one can expect will broadly depend on a number of factors, like the annual income, the total outstanding loan, the size of the loan required, credit history, personal circumstances, whether one is employed or self-employed, valuation of property owned, etc.
A secured loan under IVA is also possible against the security or collateral of some other property. No payment breaks or holidays are allowed in such loans and a default on repayment may result in the loss of property. Such loans are available through banks, some building societies and even some high street shops.