Equity release and an IVA: current rules and older equity clauses

MoneyNerd introduces enquiries to Age Partnership and may receive a referral fee. MoneyNerd does not provide equity release advice. Equity release reduces the value of your estate and can affect means-tested benefits. With a lifetime mortgage, unpaid interest compounds and increases the amount owed. Fees and early repayment charges may apply.

Ask a regulated adviser to explain suitability, costs and alternatives. For free, impartial guidance, visit MoneyHelper.

Are you trying to understand equity release with an Individual Voluntary Arrangement (IVA)? Welcome, you've found the right place for answers – we'll help you make sense of these rules. Here's what you'll learn today:

What equity release is and how it works.
The risk to your home’s equity.
Details about lifetime mortgages and home reversion plans.
Information about the equity release clause in an IVA.
How to manage the ‘equity clause’ in your IVA.

We know that the process of equity release might seem confusing. It’s a big decision, and there’s a lot to think about. But don’t worry, we’re here to help. We’ve guided many people through this process, and we can guide you too while navigating the complex world of IVAs and equity release.

Let’s dive in.

What is an Individual Voluntary Arrangement?

An IVA is a formal agreement with creditors administered by an insolvency practitioner. Suitability depends on debts, assets, income and alternatives; seek free debt advice before committing. See related guidance.

IVAs are available in England, Wales and Northern Ireland, with different local rules. On successful completion, remaining debts covered by the arrangement may be written off; excluded liabilities are not automatically cleared.

What is the clause and what does it state?

Home equity is the value of the home you own outright. For example, if you own a £200,000 home with an outstanding £125,000 mortgage, you have £75,000 in home equity. This equity is seen as an asset by creditors and is also considered an asset within an IVA.

For protocol IVAs using the 2025 rules, the family home is excluded and you do not need to release equity to pay the IVA. Older or bespoke IVAs may contain different terms, so ask the supervisor which rules apply. See related guidance.

Do not seek secured borrowing solely on the basis of an old general description. Your supervisor should explain the actual home-equity provisions, any permissions and alternatives in your arrangement.

Consider the costs and risks of equity release

Equity release is a long-term financial decision. A lifetime mortgage is a loan secured against your home. If interest is added to the loan, the debt can grow substantially and reduce the inheritance you leave.

Consider the fees, effect on means-tested benefits, early repayment charges and future care needs. Alternatives may include downsizing, using other assets or a retirement interest-only mortgage where affordable.

Use the button below to start an enquiry with Age Partnership. An estimate does not confirm eligibility or suitability. Get specialist financial and independent legal advice before proceeding.

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In partnership with Age Partnership, which advises on lifetime mortgages. MoneyNerd introduces enquiries and may receive a referral fee. Equity release can reduce your estate and affect means-tested benefits and future care funding. Fees may apply and interest added to a lifetime mortgage increases the amount owed. Specialist financial and independent legal advice are required before proceeding.

When do I need to deal with it?

Any review date depends on the version and terms of your IVA. Older arrangements may include a late-term property review; this is not a universal current requirement.

If your actual IVA requires a property review, the supervisor may request:

An official valuation of your property by asking a local estate agent.
Evidence of your current mortgage debt
Evidence of any other debts secured by your home or home equity.

This information will be used to work out how much equity you have in the property.

How much can be released?

Some older protocol calculations used 85% of the property’s value minus secured borrowing, followed by assessment of the debtor’s beneficial share. This is not 85% of existing equity. For example,85% of £200,000 less a £100,000 mortgage is £70,000 before share and other conditions.

Thresholds and treatment depend on the applicable protocol and approved terms. Do not apply the historical £5,000 threshold to every current IVA.

An Age Partnership customer’s experience

Individual experiences vary. Equity release is a long-term decision, and specialist advice is needed to assess whether it is suitable for you. Compare the costs, risks and alternatives before proceeding.

“I am more than pleased to have taken out Equity Release with Age Partnership.”

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Can I do it with an active agreement?

Many lifetime mortgages allow interest to roll up without regular payments, but some require interest payments for a set period. Optional repayments, limits and any early-repayment charges depend on the contract. Poor credit does not automatically rule out every lifetime mortgage, but lenders set credit criteria and may require some debts to be repaid. An IVA, bankruptcy, judgment or other credit issue can restrict eligibility; acceptance is not guaranteed. See related guidance.

If you have an IVA, It is highly unlikely that you will be able to use an equity release plan to loan money as a senior and satisfy the equity release clause.

Completing an IVA does not guarantee immediate access to equity release or other credit. Lenders assess their criteria, the credit record and the applicant’s circumstances.

You might not be able to get a secured loan or other credit that requires monthly repayments immediately because your credit score will still be very low and the IVA will show on your file.

» TAKE ACTION NOW: Find out how much equity you could release

Do I have to remortgage at the end?

Older or bespoke IVAs may require consideration of secured borrowing. Current 2025 protocol IVAs do not require release of home equity; ask the supervisor before making applications.

Can I get a secured loan?

Another way of borrowing against your home equity is with a home equity loan. But again, lenders are unlikely to lend to someone with an active IVA and previous debt problems.

Follow your actual approved IVA terms and the supervisor’s written advice. Do not assume every IVA requires unsuccessful secured-loan applications.

What if I can’t release the full amount required?

If an older or bespoke IVA contains an equity clause, the available alternatives depend on its terms and any creditor-approved variation. They may include:

An agreed third-party contribution, where appropriate and approved. There is no universal requirement for family to pay 85% of the debtor’s equity.
An extension or other variation if required by the particular agreement. A 12-month extension is not automatic for every IVA.

Can I sell my house afterward?

A completed IVA does not by itself prevent a home sale. Confirm completion, any remaining restriction and secured debts with the supervisor and conveyancer. See related guidance.

Quick recap!

Check the date and wording of your IVA. Current 2025 protocol IVAs exclude the family home from equity release; older or bespoke arrangements can differ. Any secured borrowing needs proper advice and required consent.

Do not assume a 12-month extension is mandatory: the approved terms, applicable protocol and any variation determine the outcome.