One of the biggest worries people have when thinking about an IVA is whether they could lose their home. If you own a property and are struggling with debt, it’s completely understandable to feel anxious about how a formal debt solution might affect it.
In most cases, an IVA is designed to help you keep your home, not lose it. However, there are some important things to understand about how property and equity are treated in an IVA.
This guide explains how an IVA affects homeowners, what usually happens to your property, and what your options are.
Do You Automatically Lose Your House in an IVA?
No. Entering an IVA does not mean your house is automatically taken or sold.
In fact, many people choose an IVA specifically because it is a way to deal with debt while avoiding bankruptcy, which is more likely to involve the sale of assets.
An IVA is set up to be a fair compromise between you and your creditors. The aim is usually to let you stay in your home while still making a reasonable contribution towards your debts.
What Is Equity and Why Does It Matter?
If you own a home, the value of your property compared to what you owe on the mortgage is called your equity.
For example:
- If your home is worth £200,000
- And your mortgage is £150,000
- You have £50,000 in equity
Creditors may expect you to extend the term of the IVA from a standard 5 year IVA to 6 years depending on the amount of equity.
When Might a House Be at Risk?
While most people do not lose their home in an IVA, there are some situations where problems can arise:
- If you already have serious mortgage arrears and can’t maintain payments
- If you fail to keep up with your IVA payments and the IVA fails
- If you don’t cooperate with the terms of the IVA
Even in these situations, there are often steps that can be taken before anything as serious as losing your home happens.
What About Jointly Owned Property?
If you own your home with a partner:
- Only your share of the equity is considered
- Your partner is not responsible for your IVA debts (unless they share the debts)
- The IVA is structured to avoid forcing a sale wherever possible
Protecting family homes is usually a priority when IVAs are set up.
What If You Rent Instead of Own?
If you don’t own a home, an IVA has no impact on property ownership. You simply continue paying your rent as normal, and your housing costs are included in your budget.
Keeping Up with your Mortgage and Bills
During an IVA, your mortgage and household bills are treated as priority payments. Your IVA payment is calculated only after these essential costs are covered.
As long as you:
- Pay your mortgage on time
- Stick to your IVA payments
- Keep to the terms of the agreement
Your home is not at risk because of the IVA itself.
What should I do now?
If you’re a homeowner and struggling with debt, it’s important to get advice that takes your property into account. My Debt Plan offers clear, impartial advice to help you understand your options and protect what matters most.
You can get debt help online or speak to our friendly team for a confidential, no-obligation conversation. Call us today on 0161 464 0870 and start taking back control of your finances.
