If you have an Individual voluntary arrangement (IVA) you will know that it can burden any chances of securing new lending, particularly on mortgages. But if you can meet certain requirements such as a big enough deposit and a successful affordability assessment we may be able to find you a lender willing to help you with a mortgage after an IVA.
You can get a mortgage but when it comes to IVAs the more historical they are the better the mortgage deal could be. The IVA will drop off your credit report after 6 years which would automatically secure you better rates, so sometimes it is worth waiting until that point or until you have finished paying it off.
It is possible, yes but as with all bad credit the lender’s decision will be entirely based on your individual circumstances. IVAs are considered one of the more severe types of adverse credit so you would need a specialist to help you through the complexities of an application. The following factors will influence your application:
The size of your deposit or equity
The size of your debt
The date the debt was settled (if repaid)
The date the IVA was registered
The information recorded on your credit files
Our experts will be able to use all of this information to determine if an application is possible before a formal mortgage credit check is completed. Each lender is very diverse with its approach to IVAs and each will have its own criteria that you will need to meet to receive an offer from them.
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Lenders have their own rules when it comes to how soon you can apply for a mortgage after an IVA. Some will decline a borrower straight away, some require a certain number of years to have passed since settlement and others need the IVA to have dropped off your credit report.
Other mortgage providers will need the IVA to be settled and paid 3 years before an application is made and others just need the IVA to be settled before the application. But, if the mortgage application is to refinance the property and the extra funds will be used to pay off the IVA you may have some flexibility from lenders.
In general, you will need a much larger amount of equity or deposit the more recent the IVA was registered and/or settled. Also, any other adverse credit history you have on file will increase the cost of the lending. This is because to the lender you are a higher risk as you had an arrangement in place for unpaid debts.
The rates you should expect will be higher than if you had a clean credit report and typically your deposit or equity would need to be substantial. As well as a larger deposit you would need a clean credit history since the IVA was registered and need to meet the lender’s other income and affordability criteria.
Bear in mind the impact other credit issues will have on your mortgage application too. If you have an IVA it is likely you have other negative marks on your file such as late payments or arrears as this is usually where the financial difficulties start. IVAs are taken to avoid repossessions or bankruptcies and allow you to keep your home with no need to sell it to pay off your debts, providing you meet your monthly payments. Lenders are aware of this and if they accept the IVA they can be flexible to the underlying issues. They tend to be more interested in the date the IVA was registered and how you have managed your payments and finances since.
Will I lose my property if I have an IVA?
No, this is because opting for an IVA over bankruptcy protects your home and means you do not have to sell it order to pay off your debts. The IVA is an agreement that you will pay back a set affordable amount every month for a certain number of years. You can keep and continue living in your home as long as you keep up with those payments. If you cannot do this your insolvency practitioner can ask the court to file a petition for bankruptcy which makes it more likely for you to lose your home.
Can I sell my property while I have an IVA?
You are allowed to sell your property to buy one of cheaper value, yes but sometimes once all the costs of buying, selling and moving to add up it is not always profitable.
During the IVA you will pay back a certain amount for a number of years, then during the final year, your creditors will ask for a valuation of your property. If you have a good amount of equity in your property they may ask that you seek to refinance it to raise funds to pay off the remainder of your debts. When your IVA is finished you are free to sell your home but it is important that you wait until you have received your IVA completion certificate. This is to confirm you no longer owe any debts to your creditors.
Securing a mortgage after an IVA can be complicated and long winded as each lender works from different credit reference agencies and these agencies do not always report the same information. This is why your first point of call should be to check your own reports before you pursue a mortgage. This way you can make sure your IVA information is up to date and correct and if not, you have time to fix this issue.
Once you have your reports get in touch and we will match you up with a specialist mortgage advisor who has plenty of experience in helping borrowers with a mortgage after an IVA. A bad credit mortgage broker is your safest option as they can find you flexible lenders who can help despite your IVA history. Going direct to a mainstream lender could result in a decline straight away, especially if your IVA is still active. This decline will be recorded on your credit file and could detriment your credit and mortgage case further.
No impact on credit scores
