Mortgages with an IVA

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Mortgages with an IVA
Mortgages with an IVA

Mortgages With an IVA – What are the options?

Bad credit can affect your ability to get a mortgage and buy a home – but it doesn’t mean your property dreams are over. With a good Mortgage Broker on your side, you can still get on the property ladder or organise a remortgage.

What is an individual voluntary agreement (IVA)?

An IVA is a legally binding agreement between you and a business that you owe money to. It is a contract setting out how you will repay the debt in a way that you can comfortably afford, and your creditor may freeze the interest or reduce the total owed to help you.

You need an insolvency practitioner to draw up the contract, which is usually a way to avoid bankruptcy. It can take years to repay the debt with an IVA.

How does an IVA affect my credit history?

Your credit history notes anything negative in your financial past such as missed payments and unpaid bills. An IVA is a fairly serious credit issue that means lenders will be reluctant to offer you any form of borrowing whilst monies are outstanding.

Some Mortgage Lenders, however, specialise in mortgages for people with credit problems. An experienced Mortgage Broker can give you clear advice on whether you could get a mortgage based on your specific circumstances.

What happens when an IVA has been settled?

Once you repay the Individual Voluntary Agreement it becomes ‘closed’ on your credit file and you receive a completion certificate from the insolvency practitioner.

Generally, It is easier to borrow money once your credit report no longer shows you have an active IVA.

How does my IVA affect my mortgage chances?

Having an active IVA can make it challenging to find a suitable lender – but a Mortgage Broker could be your best chance of finding a deal. It may be possible based on your specific circumstances, but you should find it much easier to find a lender once you have satisfied the debt.

While many mainstream mortgage companies will not accept people with an IVA on their record, numerous specialist lenders today provide tailored mortgages for those with poor credit.

Note that some lenders’ application forms ask if you have ever had an IVA. This can mean your application gets declined even if you fully repaid the IVA decades ago. A mortgage broker will avoid approaching these lenders for a mortgage deal.

Can I get a mortgage when my IVA has been settled?

Once you have repaid the IVA you have a much better chance of finding a more competitive mortgage. A broker will put you forward to specialist lenders, who will look at the details of your situation to decide whether and how much to lend you for a home.

Bear in mind that interest rates can be more expensive on a bad credit mortgage, which will make the monthly payments higher. Make sure that the mortgage is affordable before making any commitment.

What deposit will I need if I’ve had an IVA?

Depending on the lender, you may be able to buy a home with a 10% deposit, but it is always a good idea to save up more if at all possible. Having a deposit of 15% or more will usually give you a wider choice of lenders, and therefore more competitive rates.

Some people choose to wait before applying for a mortgage, to save up a bigger deposit and focus on improving their credit rating.

How can I improve my credit score after an IVA?

Generally it takes at least six months to improve your credit score. The main route to rebuilding your credit score is to always pay everything on time and stay out of your overdraft.

You could also look at special credit cards which are designed for people with poor credit to show that they can borrow responsibly.

How can a Mortgage Broker help?

We’re here to help people in all situations to explore their options and buy a home.

We’ve supported many clients with credit issues to find a suitable, affordable mortgage deal. We know the lenders who accept people with IVAs, and run credit checks with you to see how lenders will see you. We’ll support you through the mortgage application and beyond.

Mortgage Broker Services Limited is a trading name of Thomas Oliver UK LLP which is an appointed representative of The Openwork Partnership, a trading style of Openwork Ltd which is authorised and regulated by the Financial Conduct Authority.

For an initial chat about how we can help, contact our registered office today.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.