Mortgages After an IVA

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.