– Can I still have a mortgage even though I am in an IVA?
Yes, although your options will be limited.
Whenever you apply for credit the lender will carry out a credit check, which means they will see that you are in an active IVA. At this stage many lenders will decline to proceed further.
Luckily there are specialist lenders who won’t be put off by this. However, those that are prepared to make an offer will expect you to put down a sizable deposit – generally a minimum of 30%. They’ll also charge more in terms of interest rate and fees.
If the terms available potentially still makes it a viable consideration for you, a specialist mortgage broker will be able to offer help and advice so that you get the right deal for you.
– How long does an IVA last?
An IVA typically lasts for five years. When the five years have passed, and provided you have made all the payments as agreed, any remaining unpaid debt can be potentially written off. If this is the situation for your particular case you will no longer owe anything to those creditors.
The IVA will be recorded both on the Insolvency Register and on your credit record. It could be removed from the Insolvency Register when the five years are up, but will remain on your credit record for six years.
– What do I need to prove my IVA has been discharged?
When the IVA has been completed, you will be issued with a completion certificate – 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 inform the UK’s three main credit reference agencies – Callcredit, Equifax and Experian – so they can update their records. 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 to check that the details have been updated and are correct.
– Do I have to wait 6 years from when my IVA is discharged to get a higher loan-to-value?
You have to 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 general 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, and so the interest rate and fees charged are higher and the LTV is lower.
– Will all lenders allow you to borrow money when you have had an IVA?
No, unfortunately not. Even when it no longer shows on your credit report, lenders will often routinely ask whether you’ve ever entered into an IVA. If they ask, you have to answer honestly, and for some this means they will decline to lend you money.
In the case of some lenders, they won’t lend to anyone who has been in an IVA no matter how much time has passed since it was completed. Others will consider an application after, for example, three years. Happily, 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.
– How do I get an IVA?
Your insolvency practitioner should first explain all options available to you and may apply for an interim order to stop your creditors taking any 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.