Mortgages After an IVA

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Securing A Mortgage After An IVA 

What is an Individual Voluntary Agreement (IVA)? 

An Individual Voluntary Agreement or IVA is a type of payment plan that you can choose to enter into as a way to prevent Bankruptcy when your debts have become unaffordable.

You will need to utilise a qualified debt specialist known as an Insolvency Practitioner, who will make proposals to all of your creditors that they freeze the interest on your credit accounts and accept a more affordable monthly repayment on your debts. An IVA will usually last for five or six years and allow you the opportunity to settle your debt, without becoming Bankrupt.

How does an IVA affect my credit history? 

An IVA will have a significant impact on your credit rating and remain on your file for six years. If you have an active IVA you will be less likely to get a mortgage offer than if you had an IVA in the past, which is now settled. 

In fact having an IVA is considered to be quite a severe credit issue and it’s unlikely that you will be considered for any other credit, such as credit cards, loans and in some cases mobile phone contracts, until you have settled the IVA.

What happens when an IVA has been settled? 

Once your IVA has been settled you will receive a completion certificate to prove that you have fully settled your debt. Whilst you won’t immediately have a clean credit rating, it’s important to check your file to ensure that default notices show as satisfied.

How does my IVA affect my mortgage chances? 

If you apply for a mortgage whilst you have an active IVA then you are unlikely to be accepted. Mortgage applicants who have fully satisfied the terms of their IVA and are in possession of a completion certificate are far more likely to be considered for a mortgage, although you should bear in mind that you will have less options available. A specialist Mortgage Lender who deals with bad credit mortgages is the most likely to offer you mortgage options.

Can I get a mortgage when my IVA is settled? 

All Mortgage Lenders have different criteria when it comes to offering mortgages to those with a history of bad credit, although not many high street lenders will offer bad credit mortgages at all.

Some lenders won’t offer mortgages to those who have ever had an IVA and some require that the full six years have passed and it’s been removed from your file.

Specialist Mortgage Lenders sometimes consider mortgage applications from those who have had an IVA as little as three years, so long as it is fully settled and you have shown an improvement in financial responsibility since then.

Speak To An Expert

Total Home Loans are a national mortgage broker with whole of market access. Their combined experience of over 50 years in the mortgage and financial services industry means they have an enviable reputation and one which makes them well-placed to find the most suitable mortgage solution for you.

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

Whilst you may find that lenders are willing to accept your application when you’ve had an IVA in recent years, it’s highly likely that you will need to provide a higher deposit (usually 15-25%) than other applicants. You will also find that the interest rates available to you are less competitive.

If you are willing to wait until the IVA has disappeared from your credit history, you should be able to find some lenders who will offer you a standard residential mortgage with a smaller deposit of around 5-10%.

How can I improve my credit score after an IVA?

Once your IVA has been settled, you will probably still need to work to improve your credit score. As your credit score reflects your financial activity for the past six years and you will have been unable to take out any credit facilities during this time, it will probably be fairly low.

There are a range of things you can do to improve your score, which in turn, will increase mortgage availability for you. These include:

  • Check your report for accuracy and current address details
  • Ensure you are listed on the electoral roll at your current address
  • Use the Rental Exchange Scheme if you pay rent, so that your timely payments are recorded on your credit file
  • When you take out credit, see if creditors would be willing to perform a soft search so as not to leave a mark on your credit file
  • Stay within 50% of any credit limits you have in place
  • Pay bills on time and make above the minimum payments if you can afford to

How can Total Home Loans help?

At Total Home Loans our experienced Mortgage Brokers regularly help those with a poor credit history to find lenders who are willing to consider their circumstances. We have access to a wide range of independent mortgage lenders and can ensure that you will still find a competitive deal, even after an IVA.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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