Mortgages after an IVA

An individual voluntary arrangement or IVA is a contract between a lender and a debtor that helps you avoid bankruptcy. This usually involves monthly repayments to the creditor until the debt is settled.

Before the banking crisis and subsequent economic meltdown, the banks and building societies were very relaxed about their lending. This carefree attitude led to more ‘sub-prime’ lending – extending credit to people with a poor credit history. This was deemed to be one of the leading causes of the financial crash.

Understandably, banks and building societies are a lot more cautious about who they lend to and how much they will offer now. This has made it increasingly difficult to secure a competitively priced mortgage with IVA or any other adverse event on your credit file.

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Author: Carl Shave - CEO and co-founder
Last updated: 30 May 2024

What is an IVA?

An IVA is a formal, legally binding agreement between an individual and their creditors. It must be set up by an insolvency practitioner who will be a qualified accountant or a solicitor. It will then need to be approved by the court and recorded on the Insolvency Register.

The insolvency practitioner helps assess your finances and come up with a reasonable payment plan that you can afford and that your creditors are likely to accept. The insolvency practitioner will act as a middleman and deal with your creditors on your behalf. They will invariably charge a fee for this service.

Once the proposal has been accepted by your creditors, all interest and charges will be frozen. Your creditors will then be prohibited from demanding additional payments from you. You will make the agreed monthly payment to the insolvency practitioner, who will deduct their fee, then forward the appropriate amount to each creditor.

When the IVA period has passed, provided you have kept up with the payments, any debt that was not paid off over the course of the arrangement should be written off. This means you no longer owe those creditors any money.

Finally, the record of the IVA will be removed from the Insolvency Register.

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How do I get an IVA?

Initially, your insolvency practitioner should explain all the options available to you and they may apply for an interim order to stop creditors from taking action against you whilst the IVA is being set up. Following a review of your financial position, your proposal will be put forward to the creditors. If enough agree, then this will be reported to the courts with the IVA then binding to all creditors.

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Can I get a mortgage after an IVA?

Getting a mortgage with an IVA or after one, at a competitive rate, can pose some problems and it’s likely to cost you more than if you had a clean credit record. However, there specialist lenders are available who can help secure the most favourable deal. It is important to note that these lenders may offer higher interest rates and require a larger deposit.

The problems you will encounter when trying to secure an IVA mortgage are caused by the impact the IVA has on your credit rating. All lenders carry out credit checks to help them assess the risks involved in their lending decisions. Most mainstream and high street mortgage lenders will decline an application when they see an active IVA on your record.

So, the short answer is yes, however, your options will be limited, and special conditions may be imposed.

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How to get a mortgage after an IVA

If you are looking for a mortgage with an IVA, we can endeavour to help. Our dedicated bad credit mortgage team works with a network of specialist lenders across the UK, and we know exactly where to turn to find the best deal to meet your circumstances. With unlimited access to the market, we offer thousands of mortgage products including exclusive rates that are not available on the high street. We also offer free, no-obligation initial advice to help you consider your options.

To kick-start your search for a bad credit mortgage with IVA, please get in touch with our specialist bad credit mortgage brokers today.

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Typically, an IVA remains on your credit file for six years, even if you have settled it quicker than this. However, it is always good to declare it after six years if a lender asks, as it’s much better to be honest with lenders.

Remember that a properly set-up and administered IVA is designed to be an effective responsibility for handling your debts. But having an IVA on your record will sadly have a negative impact on your application for a mortgage or remortgage.

Remortgaging is often a very good way to raise capital to consolidate your debts as the interest rate on a mortgage is typically more favourable than that for a personal or secured loan. But getting a mortgage while an IVA is in place can be sometimes problematic.

However, if you have enough equity in your property and are able to show an improvement in your financial situation – as well as having taken steps to fix as many outstanding issues on your credit record as possible – then your chances will be a lot better.

We work with lenders who understand IVAs and are flexible with your finances. They are especially accommodating if things have changed in more recent years. They could be prepared to offer you a mortgage even while an IVA is still active, or a remortgage to pay off the debt and clear your credit record of the black mark.

It’s not uncommon for someone to ask ‘Can I remortgage with an IVA?’. However, there isn’t a straightforward answer to this question.

The process of getting a remortgage after an IVA can be quite straightforward if you are working with a specialist adviser. It’ll mean you have to be open and honest about your financial history, but also about what has changed since the IVA was set and the measures you have taken to bring better management to your money. You will also need to have a decent amount of equity already in the property.

Due to the personalised nature of the application, the process of underwriting a mortgage while you have an IVA in place will need to be done manually rather than dealt with by automated computerised algorithms. The benefit of this is that a real person will be going over your circumstances and figures before assessing your situation and making the crucial decision.

Being human, the underwriter may take a broader view of your position financially and have a better understanding of the nuances of human behaviour, characters and outcomes. Where a computer might automatically say ‘no’ upon seeing a negative fact.

One of our experienced (and human!) advisers will be able to take a good look at your individual situation, offer solid advice for how to move forward, recommend deals not found on the high street and match you with the right lender for your circumstances.

A growing number of new specialist lenders continue to enter the market with products designed to fill this gap in requirements and help people who may otherwise be left by the wayside when it comes to home ownership.

It would be impossible to list all the specialist lenders who consider applicants with an IVA here – products and deals come onto the market and are taken off all the time, and new lenders may even emerge at the time of writing.

But they will typically only deal with applications made through a trusted third party or broker (such as us at Just Mortgage Brokers). With each lender having their own criteria for the nature of the IVA. In general, they are more flexible than most and there has never been a better time for people with poor credit histories to get a mortgage.

To find the best lender for your circumstances and requirements, we’ll go over your personal situation and get a thorough overview of where you currently stand. Contact us now to book a free, no-obligation initial discussion.

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Carl Shave

CEO and co-founder

About the author

Carl Shave has been involved in the mortgage & finance industry since leaving education and is one of the co-founders of Just Mortgage Brokers. He has written guest posts and provided journalist comments for companies such as The Times, FT Adviser, Mortgage Strategy, Mortgage Solutions and others, demonstrating his extensive industry knowledge.

Mortgages after an IVA FAQs

When the IVA has been completed, you will be issued with a completion certificate. This is written confirmation that you have made all the necessary payments. It takes about six to eight weeks to come through and the IVA is not officially discharged until it is issued. Keep it in a safe place in case you need it.

In addition, the Insolvency Service should remove your details from the register. And then inform the UK’s three main credit reference agencies, so they can update their records, – Callcredit, Equifax and Experian. It’s a good idea to get copies of your credit report from the agencies a month or so after you receive the completion certificate. This allows you to check that the details have been updated and are correct.

You must wait six years from the IVA start date for it to disappear from your credit record, but the loan-to-value (LTV) ratio offered, at any stage, will depend on the lender and their criteria.

As a rule, the more recent the IVA, the lower the LTV that will be offered. If there are other adverse credit issues on your report, then this will also have an impact.

The issue is the perceived risk of you not repaying the money borrowed. Anyone with a history of adverse credit is deemed to be a high risk, so the interest rate and fees charged are higher and the LTV is lower.

No, unfortunately not. Even when it no longer shows on your credit report, lenders will often routinely ask whether you’ve ever had an IVA. If they ask, you have to answer honestly and for some this means they will decline to lend you money.

Some lenders won’t lend to anyone who has had an IVA no matter how much time has passed since it was completed. Others will consider an application after three years, for example. There are lenders for whom this is less of an issue and who are prepared to lend so long as the IVA has been settled. A specialist mortgage adviser will help you find the right deal for you.

Yes, it is possible. However, if you were applying on your own, there may be a limited number of lenders who will accept your application. By using a mortgage broker, you can increase your chances of being successful.

After six years an IVA will be removed off your credit file, increasing your chances of getting a mortgage. However, it is still possible to get one before this period ends.

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