Debt and Your Home
Your home is probably your most important asset, so protecting it takes high priority. If you are struggling with debt, you might be worried about what could happen to your home. Fortunately, many debt solutions minimise the risk of losing your home, whether you own it outright, pay a mortgage, or rent. At Creditfix, our friendly advisors will talk you through how you can best protect your home when dealing with debt.
IVAs, Trust Deeds, and your Home
One of the main advantages of Trust Deeds and Individual Voluntary Arrangements (IVAs) is that, assuming you stick to the terms of your plan, you are able to retain your home. This is not the case with sequestration or bankruptcy, which will usually involve selling any property you own and repaying creditors with the profits.
However, you may be required to release equity from your home as part of a Trust Deed or IVA. This means taking a step backwards in the process of paying off your mortgage, but does allow you to keep your home. The equity released will go towards paying your creditors.
Using your home for Debt Consolidation
It is possible to use the value of your home to help with your debt, but this can put your home at risk and should be considered carefully. If you have enough equity in your home to clear your unsecured debts, you might choose to release this by remortgaging the property. This is a viable solution for some people, but you could run the risk of losing your home if you find yourself unable to keep up with the adjusted mortgage payments.
IVAs and Trust Deeds should not affect your tenancy or ability to rent a property. Additionally, your landlord does not need to be informed that you have entered into a formal debt repayment plan. Rent arrears cannot usually be included in an IVA or Trust Deed, but the reduced monthly payments they entail can free up more income to cover essentials like rent. Your payments will be based on what you can afford each month, so could also take into account a rent arrears repayment schedule.
Debt can affect homeownership in various complex ways, so seeking professional advice is vital before deciding how to tackle your debt. You can find out more about how debt can affect your home below.
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