IVA Mortgage

Iva mortgage

This page was last updated on 1 October 2021

IVA Mortgage In 2021

What is an IVA?

This acronym is short for for individual voluntary agreement. This agreement helps people that have a bad credit score. Essentially, it stops them from going bankrupt.  When you get an IVA, an insolvency practitioner will set up a payment plan so you can pay back the people that lent you money. Once this legal document is signed, the debt and interest freezes. 

Topics that you will find covered on this page

You can listen to an audio recording of this page below. 

You will then pay the insolvency practitioner as per your individual voluntary arrangement. Then, the practitioner passes the money on to the lender. From the day you get an IVA, it will be visible on your credit rating for six years. 

However, an IVA can be a useful way of making sure you keep up repayments. This type of debt management prevents issues and problems associated with bankruptcy. For example, if you go bankrupt your home may be repossessed. 

So, the drawbacks of an IVA are often outweighed by the benefits. Mortgage acceptance can be difficult for many years after, though. 

Can you get a mortgage on IVA?

When you have an IVA, mortgage acceptance is still possible. However, involuntary agreement mortgage lenders can be hard to find. Typically, a high street company will be more less keen to give you a mortgage. 

However, specialist lenders might accept an application for a mortgage alongside insolvency. Because of your poor credit and insolvency, they might ask you to pay a bigger deposit. 

So, it is possible to get mortgages when you have an insolvency on your credit file. However, a better mortgage deal might result if you wait until after the agreement is complete. Better yet, wait until the IVA is removed from your credit file.

Here is a short video about getting a mortgage with an IVA.

How long after an IVA can I get a mortgage?

You can get a mortgage at any point, however whilst you have an IVA mortgages can be harder to get. Getting a mortgage after your IVA can also be harder.

The difficulties with IVA mortgages arise from the fact that mortgage lenders can see the IVA on your credit report. If you have, or have recently had, an IVA, mortgage lenders might doubt your ability to make repayments on your mortgage. 

Despite the difficulty associated with an IVA mortgage, specialist mortgage providers exist for people with bad credit. These lenders may be more willing to grant you a mortgage after an IVA. 

Remember though, if you have bad credit mortgage rates will probably be worse. This normally means higher interest rates and putting down a bigger deposit.

To find out exactly what deal you could get, speak with mortgage brokers to get advice and a quote. Mortgage brokers you discuss your credit history with need to be authorised and regulated by the financial conduct authority. 

How long does an IVA last on your credit report?

Your IVA will be visible in your credit history for 6 years. This is six years from the day the IVA begins, now when it ends. After this time, as long as you made no late payments and the IVA is complete, it will be removed from your file. 

When you decide to apply for your mortgage, the lender normally asks if you have ever had an IVA. So, even though it isn’t on your credit report, you might have to tell the mortgage company about it. Even though the six years is up, they often still decline you mortgages because they see you as a risk. 

When looking for a mortgage deal you should also think about how good your credit score is. Just because the IVA isn’t on the record, your credit score won’t necessarily be outstanding. The worse your rating, the worse mortgage deal you will get. 

Luckily, you are able to view your credit score three times each year. This is free to do. If your report shows bad credit there are actions you can do to improve it. 

What can be done to elevate my credit again?

You can still have bad credit once your insolvency is finished. Lenders will still see you as a risk, because there is little evidence of you making payments in a timely manner. 

To recover your credit rating, pay all bills on time. This will make a post-IVA mortgage more accessible. 

Lenders use a credit file/record to predict behaviour in regards to future finances. Specifically, whether you can be trusted to repay the money as agreed. If your credit file is linked with that of a spouse, or ex-spouse, this could affect your rating and the lender’s decision. 

Finally, registering on the electoral register can help. You also should ask for a copy of your record of credit. Then you can check there aren’t any mistakes, dragging your score down.

"Your IVA will be visible in your credit history for 6 years. This is six years from the day the IVA begins, now when it ends. After this time, as long as you made no late payments and the IVA is complete, it will be removed from your file. "

Can you rent with an IVA?

Normally, if you are renting a home an IVA won’t affect you. You should double check your home’s rental contract, though. There could be a clause in it about insolvency agreements.

iva mortgages

Can I remortgage with an IVA?

An IVA gives the impression that you are a risk and have bad credit. This means that remortgaging with an IVA is just as tricky as finding a standard mortgage.  

But, with an IVA you can still get a mortgage. Therefore, you could still get a remortgage. A remortgage can help raise the money you need to pay off your debt problems. 

If you want a remortgage, we recommend the following:

  • Improving as much of your bad credit as you can
  • Build proof that you have improved your financial situation
  • Showing that you have a lot of equity in the property already

 

These remortgage IVA tips address your bad credit. They also help convince mortgage lenders that you are reliable. 

You can also boost your remortgage chances by moving away from the high street. Instead, choose to get started with specialist companies. Mortgages and remortgages are more likely to be accepted by these companies

Will an IVA affect me getting a mortgage?

Mortgages are much harder to get when you have an IVA. It is a little easier to get a mortgage for a home once the IVA is complete. However, the best chances you have of a mortgage is when the IVA is removed from your credit history. 

Even after this, mortgages can be trickier to get. In all situations, it is possible to get accepted for a mortgage. You must expect and prepare for lenders to suggest worse deals, though. 

remortgage with an iva

How long does an IVA stay on your credit file?

It is often worth waiting until the IVA is complete, and erased from your credit, to get a new mortgage. 

Six years is how long the IVA stays on your credit record. This is from the day the agreement begins. However, the bad credit history can haunt you for much longer. 

Yes, you may pass initial credit checks. But, if a mortgage advisor asks, you have to disclose that you previously had an IVA. So you might still have issues finding a mortgage. 

We recommend getting advice from an independent mortgage broker to raise your chances for getting a mortgage. 

How do I prove my IVA is complete?

After the IVA has been settled you will get a completion certificate. This means your debt issues should no longer show on credit files. 

While this normally happens automatically, our advice is to check yourself that the IVA has been removed. If not, your issues with mortgages could be worse than they need to be. You can get free credit reports.

iva with a mortgage

How will a windfall clause affect my debt?

A windfall clause is put into some contracts. It ensures that if you suddenly get a lump sum of money, for example inheritance or lottery winnings, you pay this money into your insolvency agreement. 

If you have this clause in your agreed contract then you probably cannot use the money for deposits for mortgages. 

The only time when you might not have to pay the money to the IVA is if you need the money to live off. For example, if you are made redundant and unemployed, or cant work due to illness, the compensation can be used for living costs. 

Do I have to remortgage as part of my IVA?

The terms and conditions of your involuntary agreement will explain whether a remortgage is required.

In some scenarios, creditors want you to remortgage six months before the agreement ends. This is so you use the equity in your existing home to pay a large lump towards the insolvency.

Some creditors, however, might be happy to not involve your home in the IVA. 

If you do need to do this, finding a provider for equity release through a remortgage can be tricky. However, professional advice can show you the best places to shop for mortgages. 

What happens if I can’t find a provider for my remortgage? 

Remortgaging can be expensive in itself. If it is going to cost too much, or you simply cannot find a provider, the terms of your insolvency agreement may be affected. 

For example, the length or term of the agreement might increase. Normally it extends by 12 months. This means another year until you are likely to get accepted for mortgages. 

Alternatively, the monthly payments you have to make to pay off insolvency could increase. 

What happens to buy to let mortgages in insolvency? 

If you have a home on a buy to let mortgage you are probably wondering what happens to this when you get an IVA. What your creditors want you to do depends on whether the buy to let generates profit or not. 

If the home is cost neutral, creditors will consider if equity release from the home is possible. If the home has positive equity, it will often need to be sold to contribute to the insolvency. 

If the home is cost negative, e.g. you have to contribute money to mortgage payments, you can bet that creditors will want the property sold. This is because it is worsening your financial situation. 

If the home is cost positive (i.e. it generates equity) most creditors will let you keep buy to let mortgages. They will want profits to go towards the IVA, though. 

Is an IVA problematic for a first time buyer?

First time buyers might actually find it slightly easier to get a mortgage. IVA agreements might not seem so bad to a lender, because when you stop renting your total expenses may fall. 

Speak to a mortgage broker to discover what monthly mortgage payments you should expect. Using this mortgage advice, you can work out whether your monthly outgoings will be lower if you got a first time buyer mortgage. 

Always ensure brokers you chat with are authorised and regulated by the financial conduct authority. Even if the mortgage advice from the broker does indicate your outgoings will fall, your chances of getting approval for mortgages are still very low. 

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What other difficulties might I have getting a mortgage?

Firstly, if you still have a weak credit score after the 6 years, providers might not grant you the right to buy. Without good credit, how can they trust you to pay off the bill on your mortgages on time?

Secondly, mortgages generally are harder for self-employed people to get. Self-employed individuals often find it harder to prove their income. So, if you are self employed make sure you can give sufficient evidence of a reliable and stable income to a mortgage provider. 

Finally, when applying for mortgages lenders often ask if you have ever had an insolvency agreement or been bankrupt. Even if it was over 6 years ago, you have to be truthful. This can prevent them granting the right to buy. 

Where can I find an advisor to get in touch with?

There are many brokers out there that can offer tailored mortgage advice. You can get their details online. 

We recommend choosing an independent advisor. This is so you are certain you get the best deal. 

Some brokers are tied to certain lending companies, which means they won’t shop the whole of the market. Instead, they just offer you deals from lenders they are tied with. This means you could lose out on a better deal elsewhere.

Below you can see the best mortgage deals on the market.

Some of these are available even if you have an IVA.

Get FREE help and advice in choosing the right one for you.

mortgage brokers

Learn More About Mortgages In The UK

How do mortgages work in the UK?

Buying a home or land is expensive. A mortgage is a financial product that helps people purchase their own home or land.This is especially true for a first time buyer, as it might be the only route onto the property ladder.

The minimum credit score for a mortgage

ou can still be approved for a mortgage to buy a property if you have a poor credit score. However, someone with a poor credit score will probably have a higher interest rate than someone whose credit score is good. Buyers with a low credit score may also need to pay a bigger deposit.

fixed term Contract Mortgages

A fixed term contract is a way of describing certain types of employment. If your current employment contract is due to end after a certain period of time, or after a specific piece of work is complete, you are likely on a fixed term contract. 

how long does a mortgage application take?

After sending off the final application waiting for the decision can be frustrating. Many prospective homeowners ask ‘how long does it take?’ but the truth is the mortgage approval process is always different for each customer.

how long does conveyancing take?

The entire conveyancing process will normally take anywhere between 8-12 weeks, however you should be prepared for this to take much longer depending on your circumstances and wider factors. This articles explores what the timescale involves.

Mortgages if You are bankrupt

There is no hard and fast rule when it comes to what lenders will accept your mortgage application if you want to get a mortgage after bankruptcy. They will lend to discharged bankrupts and consider each case individually. 

what stops you getting a mortgage?

Everyone wants to get the best deal when it comes to buying a home and getting a mortgage when they buy a home. However, being too ambitious can lead to your application being rejected. 

how much do mortgage advisors charge?

Fees for mortgage brokers can be off-putting. A mortgage is an expensive financial product, and often buyers want to save as much money as possible. This might limit their options when it comes to using a mortgage broker.  However, not everyone advisor charges a fee.

IVA Mortgage

When you have an IVA, mortgage acceptance is still possible. However, involuntary agreement mortgage lenders can be hard to find. Typically, a high street company will be more less keen to give you a mortgage. 

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