Can I get a mortgage after an IVA?
If you have substantial levels of debt, you may enter into an individual voluntary arrangement (IVA), which is an agreement to pay back your debts over a certain period. The agreement is made with your creditors and it is legally binding. The IVA can be arranged to suit your own individual circumstances and there are advantages and disadvantages of entering into this agreement.
Of course, an IVA puts you in a difficult position when you want to obtain credit, but it also helps you to become debt free within a set period. With an IVA, you will usually just make one payment and you probably won’t have to pay the full amount back.
It will also save you from the hassle of being harassed by your creditors, which can be extremely stressful. You will only pay the amount you can afford, and it will stop your debt from spiralling any further out of control.
If you have several creditors chasing you for payments and you can’t afford to pay them all, an IVA might be the only choice. The good thing is that despite the problems with obtaining more credit, you will be in a better position than many others in six years as you won’t have any debt.
If you currently have an IVA and you are interested in getting a mortgage, you might be worried that there is no hope. Although you may find the number of mortgage lenders more limited if you have an IVA, it is still possible to obtain a mortgage.
At Finance Surgery, we work with a range of different lenders who even help those who are in an IVA. Our trained and experienced advisors have worked with customers in this situation and have helped them to get a mortgage. If you find yourself in this situation, you should get in touch with us and we will see what we can do for you.
An individual voluntary agreement is insolvency, but it is not the same as bankruptcy. It is a formal solution to debt problems and is set up by a lawyer or accountant.
It can also be arranged by a debt management company, but this is often more expensive than an insolvency practitioner. The charge for an insolvency practitioner (i.e. accountant or lawyer) is around £5,000, although it may be more.
With an IVA, you work together with the practitioner to decide on a monthly payment for each creditor, which will then be taken to the creditors to agree to. The insolvency practitioner may agree to take money from your monthly payment as part of their fee, rather than asking for the money upfront.
IVA’s are good for those with substantial debt and by entering one, you may end up with some of your debt being wiped out.
It is important to carefully consider an IVA though, as you may end up having to re-mortgage your home and it could have an affect on your job, if you work within the legal or financial sector. It will also wipe out any savings you have. If you have large sums of debt though, it is worth considering.
How to get a mortgage after an IVA?
If you have record of an IVA on your account and are looking for a mortgage, your options may be limited but there are still mortgage lenders who will be willing to lend to you.
An IVA will obviously impact on your credit report, but this can also be said for being in debt. After you have completed the individual voluntary agreement, it will be more challenging to get a mortgage as it stays on your credit file for some time after.
As lenders check your credit file when deciding whether to offer you credit or not, the IVA can influence their decision. The IVA shows that you have had troubles with paying your creditors and therefore they will be a bit apprehensive about offering you a mortgage.
The IVA stays on your file for about six years from the registration date, even if it has been settled before this date. It is important to settle your individual voluntary agreement as soon as possible, but it will still be difficult to get a mortgage after an IVA.
Most mortgage lenders don’t look too favourable on an IVA, but there are specialist lenders who help people in this situation. If you have completed the IVA, you must also ensure that you don’t start missing payments on your account, as mortgage lenders will usually look at the history of your accounts following it.
You should aim to keep your accounts in a good condition after the IVA, as this will greatly improve your chances of success. If you are in this situation, it is important to speak to a specialist in this area and this is where we can help at Finance Surgery.
We work with a range of lenders with different criteria, including those who consider IVA’s and other adverse credit problems. We attempt to put you in touch with a specialist advisor who will help you with your application and give you the best possible chance of success.
If you have finished your IVA, it might be a bit of a struggle to get a deposit together. The size of the deposit will depend on the length of time since the IVA started. If you can hold off for a while after your IVA is finished, before applying for a mortgage, this will reduce the size of the deposit.
If the individual voluntary agreement is still on your file when you apply for a mortgage, you will be looking at a deposit of 25% minimum in most cases. If it’s off your file, the deposit will be 5%-10%*.
As you can see, it is probably more beneficial in the long run to wait until your IVA has cleared from your account. You should aim to keep your accounts in good shape after this, so you are less risk for lenders.
One of the main drawbacks of having an IVA and applying for a mortgage is trying to get the deposit together, especially if you are having to put down £10,000 or more. If you don’t have anyone to help you out with the deposit, you will need to save as getting credit won’t be an option.
It is a good idea to put the money you were paying to your arrangement into a savings account when the individual voluntary agreement is finished. You will be used to paying this anyway, so it won’t have any effect on your day to day life. If you can afford to put a little more away too, this will help you get to your target quicker.
If you are looking to remortgage when you have an IVA, the first thing you need to do get an understanding of exactly what is on your credit file. It is important to understand what your credit records are showing, including whether your IVA is still present and whether there is any other adverse history recorded. There are plenty of ways to check your report for free, including Experian and Clear Score.
When you have a clear understanding of your situation, our advisors at Finance Surgery can liaise with the most appropriate mortgage lenders to assess the situation and give you the most suitable options for remortgaging. We have worked with many customers who are looking to remortgage with an IVA and can help you find the right mortgage lenders based on your situation.
We know that no-one wants to be in a situation where they have an IVA, but this is more common than you might think. We understand that this can cause all sorts of complications, especially when trying to obtain credit and our advisors are well versed in this type of situation.
We take every application and assess it separately, so we can offer you the right option. As we have been working with all sorts of mortgage lenders for several years, we have lenders with different criteria, and some will be willing to accept those who have completed an IVA.
We can help support you with your application, to give you the best chance of success. We will try to only put you in touch with mortgage lenders who are likely to accept you, which saves you from being declined by other lenders.
We know this situation can be stressful for you and we will do our upmost to make it as pain-free as possible. If you want good service and a lender who offers you great value for money, we will be able to help.
Even if you are looking to remortgage after an individual voluntary agreement, we will be able to advise and help with your specific situation.
*https://www.which.co.uk/money/mortgages-and-property/mortgages/mortgages-and-deposits-the-basics/how-much-deposit-do-you-need-for-a-mortgage-acs1c3t6f9r0