May 10 2007
IVA.co.uk, the UK’s biggest online IVA community for information and advice about Individual Voluntary Arrangements (IVAs), today announced the launch of the IVA.co.uk Rate Rise Mortgage Calculator, available on the website (http://www.iva.co.uk/mortgagecalc.asp), which allows the consumer to see how their monthly payments will be affected by the rate rise.

The page also contains a number of illustrative tables, showing how the latest rise will impact on homeowners, according to their mortgage amount and type.

For example, a person with a £175,000 mortgage, with 25 years remaining on their mortgage and a current APR of 5% will see a monthly payment increase of approximately £26 on a repayment mortgage, or £36 if paying interest only.

Further tables on the site also demonstrate how much the average payment is likely to have gone up in the 4 rises since August 2006.

For example, a person with a £175,000 mortgage, with 25 years remaining on their mortgage and a current APR of 5% will see a monthly payment increase of approximately £102 on a repayment mortgage, or £146 if paying interest only.

Andy Davie, site manager and spokesperson for IVA.co.uk, warned that today’s base interest rate rise could leave thousands struggling to stay afloat:

“The rise in interest rates will clearly affect the financial situation of many people in the UK, but it will be particularly serious for people in Individual Voluntary Arrangements. IVA budgets are calculated to the nearest pound, usually leaving a contingency of around £50. The mortgage payment rises caused by today’s base rate rise will eat into that contingency, leaving no money for other unforeseen circumstances. Unfortunately, this will increase the likelihood of the IVA failing, leading to enforced bankruptcy in many cases. All is not lost, however, and some agreements can be renegotiated in light of a change of circumstances. I would invite anyone affected by today’s rate rise to visit the IVA.co.uk forums for support and would recommend that those in IVAs contact their Insolvency Practitioner as soon as possible for advice.”