IVA Mortgages & Remortgages - All You Need To Know

With a wealth of experience in the IVA and adverse credit mortgage market, we’ve unlocked competitive rates for many clients across the UK. With our talented team of brokers with you every step of the way, it may not be necessary to wait until your IVA is removed from your credit file. Banks and building societies may be quick to say no; however, the deals we’ve secured reflect the growing number of lenders who measure the merits of each application on a case-by-case basis.

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Mortgages

What is an IVA

An individual voluntary arrangement (or IVA) is a court-approved legally binding agreement between you and your creditors to repay what you owe over a period of time, usually around five or six years.

When an IVA is in place, it means that creditors should have to stop charging interest on debts and stop chasing you to make payments, so it can help you regain control over your finances and relieve the pressure you are likely to be under at this time.

Once you have an IVA, you will need to ensure that you make the agreed payments, either in a lump sum or in a single monthly payment. You must also let the IVA provider know if your financial circumstances change, such as if your income increases or you receive a windfall/inheritance, as this will likely need to be put towards paying off your debts.

Any amount of debt can be included in an IVA and there is no minimum or maximum limit, but the associated fees can be high, so it may not be the best option for those with debts totalling less than £10,000.

Can I get a mortgage with an IVA?

The answer is yes, it’s certainly possible to get a mortgage with an IVA, but it may be more difficult to be accepted by lenders. Because your credit rating will be affected by your IVA, it can be challenging to find a mortgage provider, but a specialist broker can help you with the application process and help you find a lender and the most appropriate deals available.

You will need to have permission from your insolvency practitioner (IP) in order to pursue a mortgage while you have an IVA, as you are unable to access new credit over £500 without IP permission - and a mortgage will be included in this.

You are likely to see higher interest rates with IVA mortgages because you’re viewed as a higher risk than borrowers with healthy credit scores. A mortgage broker will be able to help you find the most appropriate deals available, however.

You may also need to have a higher deposit than you would do if you didn’t have an IVA, as this will give lenders a greater sense of security that you’ll be able to repay your debts. If you’d like to find out more, get in touch with us today.

Will an IVA prevent me from getting a mortgage?

It is possible to get a mortgage while you’re on an IVA, but it can be quite challenging. Typically, IVAs show on your credit file for six years after the agreement was made or upon completion if it takes longer than six years to clear your debts.

However, there are lenders out there that will allow clients to apply for mortgages while they’re still in an IVA, as long as it has been cleared on completion.

Once the IVA has eventually been removed from your credit report, your chances of being approved for a mortgage will increase. However, it is possible that you will be asked whether you’ve ever had an IVA and this may affect their ultimate decision.

As such, once your IVA has reached completion, it can be useful to take steps to actively improve your credit rating to make you a more attractive prospect for lenders.

Do I Have To Declare An IVA On Mortgage Applications?

You may well have to declare your IVA on your mortgage application, even if it’s been removed from your credit file. Mortgage applications include many different questions and it’s important to be as honest as you can if you want to maximise your chances of being approved.

It is likely that you’ll be questioned on any financial difficulties you may have experienced in the past, as well as whether you’ve had to use debt solutions or been declared bankrupt. Note that if you lie on your application, you will be committing fraud and this could cause more problems for you in the future.

Can I Get A Joint Mortgage With An IVA?

If you’re considering a joint mortgage application at the moment and one of you has an IVA, you will likely find that the agreement will have an impact on the application. Lenders typically carry out financial and affordability tests on the couple as a whole, rather than individuals, so an IVA will count against you even if only one of you has one.

However, there are lenders out there that will allow clients to apply for mortgages while they’re still in an IVA, as long as it has been cleared on completion.

Can I Get A Mortgage After An IVA?

If you’re wondering whether you can get a mortgage after having an IVA, the short answer is yes. It is entirely possible to be approved for a mortgage once you’ve completed your IVA, but you may find that you’re not eligible for the lowest rates.

It may not be a straightforward process either and you may find that high street lenders decline your application, but there are specialist lenders out there who may consider you as an option. If you are approved for a mortgage, you may find that you have to pay higher interest rates and that you have to pay a larger deposit.

What is important to note is that every mortgage application is different and lenders will assess cases individually, so there’s no set answer that can be applied. You may find that you’re offered some very competitive rates without the need for a bigger deposit, but a specialist mortgage broker will be able to help you find the most appropriate deal for you.

Before you apply for a mortgage, it can be advisable to check your credit report so you can see what’s on your file and what isn’t, allowing you to find areas for improvement and make sure any errors are corrected.

How Long After An IVA Can I Get A Mortgage?

You will likely find that you do have some mortgage options available to you immediately after you’ve finished your IVA, but note that your credit rating will be affected by your financial position and, as such, your options may be limited.

You will also likely be faced with some restrictions, but it’s certainly worth looking into and you may be surprised by what’s available to you.

Waiting as long as you can after an IVA before applying for a mortgage can increase your chances of success, however, since the number of specialist lenders willing to consider you as an applicant will likely increase over time.

Remortgages

Remortgaging With An IVA

If you’re considering remortgaging with an IVA, you will find that there will be restrictions placed on your property for the duration of your agreement. You will need to have permission from your supervisor if you want to remortgage or sell your property.

Check your initial IVA proposal that you would have been given by your IVA provider to find out all you need to know about what can happen to your property. Your provider should also get in touch with you before any scheduled remortgage so you know what action you need to take.

You should be sent a copy of your property terms six months before your IVA is due to finish. When reviewing your IVA, your provider should ask your secured lenders for a redemption statement that will show how much it will cost to settle your mortgage, as well as completing a property valuation and sending you a copy of the relevant property sections from the IVA proposal.

Your remortgage will be based on 85% loan-to-value of your property. The value will be reduced by 15% and then what’s left on your mortgage will be deducted from this figure. The remainder is the equity that is available for your IVA.

Can I Remortgage After An IVA?

You will likely find that having an IVA will affect remortgaging, but it’s important to remember that it is possible to remortgage after you’ve completed your agreement. It will depend on how long it has been since the agreement has been discharged, as well as how much equity is left in the property and your current financial circumstances.

It will not be a straightforward process to remortgage if you do have bad credit and you will find that there are fewer lenders available. As such, it can be useful to get in touch with a specialist mortgage broker to help you maximise your chances of success.

Each lender has their own criteria that they adhere to and there are specialist lenders out there that may well consider you as a prospect, rather than the more traditional high street providers.

Your reasons for remortgaging can also make a difference to the success of your application. For example, if your fixed-rate deal is coming to an end and you’re looking for a new one, lenders may view this more favourably than if you were simply trying to remortgage to raise capital.

The reasons for your financial struggles can also make a difference and some lenders may be more receptive if you ran into trouble because of ill health or a death in the family, rather than poor financial management.

Remortgaging To Pay Off An IVA

If you want to pay off your IVA early, you may be able to remortgage your property and release some equity so you can settle your agreement ahead of time. There are various benefits associated with this, including not having to make any more monthly payments and not having to use any income increases or windfalls for your IVA.

However, it is likely that you will need to change lenders as part of the process, which a specialist mortgage broker will be able to help you with.

The amount of equity you will need will depend on how long there is left in your IVA. Typically, you will need to have an amount that equals the number of your remaining monthly payments, multiplied by the monthly amount you’ve been paying. There may also be fees you need to pay.

Think carefully before securing debt against your home, your home
may be repossessed if you do not keep up repayments on your mortgage.

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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK. The overall cost for comparison is 4.8% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

We may receive commission that will vary depending on the lender, product or permissible factors, The nature of any commission model will be confirmed to you before you proceed. Create Finance Ltd are a credit broker, not a lender.