If you have an Individual Voluntary Agreement (IVA) in place, you may be unclear about where you stand with regards to getting a mortgage. The answer will depend on your individual circumstances, but an IVA does not automatically exclude you from getting a mortgage.
However, it is strongly advisable to seek some advice from IVA mortgage specialists. This is because the process of getting a mortgage is more complicated if you have adverse credit history, and you will have a smaller panel of lenders who will be willing to make you an offer.
It’s crucial that you apply only to lenders who are likely to accept your application, as a refusal will count further against your credit record. Choose your mortgage broker carefully to make sure that they have previous experience of helping people in your circumstances.
A good broker will make sure that your application presents your case in the best possible light, so that it is factually accurate and explains any mitigating circumstances for your adverse credit history. They will also have established working relationships with lenders who specialise in non-standard mortgages, which would be difficult to access without help.
IVAs are legally binding agreements between yourself and your creditors to help you pay back your debts at a level affordable to you, over an agreed timescale. It allows you to improve your financial situation without being charged interest, or being hassled by debt collectors and threatened with having your property repossessed.
Debts which can form part of the IVA include credit cards, council tax, utility bills, payday loans, and income tax. However, they don’t include child maintenance, student loans, TV licence arrears, or magistrate’s court fines. IVAs can be arranged through a debt management company or an insolvency practitioner.
If you have used an IVA within the past six years, it will appear on your credit history, which will be used by lenders as part of their assessment for your mortgage application. Some lenders, especially the main high street banks and building societies, will be unwilling to offer you a competitive deal, and may reject you outright.
They may have concerns about how responsible you are at managing your finances, which represents a higher risk for them. They may also decide that your income isn’t sufficient or stable enough to support a mortgage, especially if your outgoings are likely to rise once the IVA ends.
If you have completed your IVA, and your debts are fully repaid with no further issues, you may be in a stronger position than if you are currently in one. Some lenders may even view a successfully completed IVA as a sign that you are capable of responsible financial practice.
They will also take into account the level of debt involved, how many different creditors were involved, and how much time has passed since the IVA was completed. In fact, there are many variables which will affect your chances of securing a mortgage offer. That’s why it’s very important to get the right advice before approaching a lender.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Create Finance Limited is an appointed representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
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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. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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 actual rate available will depend upon your circumstances. Ask for a personalised illustration.
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