Debt Relief Order
Debt Arrangement Scheme
Bank Loan Debt
Payday Loan Debt
Credit Card Debt
Store Card Debt
COVID-19: We have answered some of our customer's most frequently asked questions
Buying a home is a dream for many but, for those with high amounts of debt and poor credit ratings, getting a mortgage may not feel possible. An IVA is one such option to get back on top of your debts and start making the dream a reality.
However, while this agreement is in effect, it’s very unlikely you’ll be approved for a mortgage. Afterwards is a different story. Read on to discover why an IVA might actually increase your chances of getting a mortgage.
If you want to get credit with an IVA, any sum worth more than £500 has to get written approval from your insolvency practitioner. As the whole point of this agreement is to help you get back on top of your finances, taking out a mortgage may put the IVA in unnecessary risk.
Even if the insolvency practitioner signs off your mortgage request, finding a lender willing to give you a good deal will be extremely challenging. As a result, it seems very unlikely you’ll be able to get a mortgage while on an IVA.
Although this sounds bleak, it’s worth considering if your mortgage application would have been approved before the IVA. For example, although providers can see the agreement on your credit report – and see you’ve had problems repaying lenders – this is arguably better than still owing large sums to multiple creditors.
Although you can make an application with your current financial situation, if you’re still struggling to repay what you owe, adding a mortgage to the mix would only likely cause additional problems. In this situation, providers would probably also refuse your request.
Getting a mortgage after an IVA – when you’re in better financial shape – should result in you getting better rates and deals.
Although it’s possible to get a mortgage after an IVA, it’s best to not start your application straight away. While it’s understandable wanting to get on the property ladder as soon as possible, you should wait until your credit score starts improving.
An IVA will stay on your credit report for six years after the arrangement was approved. During this time, lenders can still see the agreement and will probably be reluctant to offer credit. If you focus on building your credit score though, you’ll start eventually gaining access to better offers.
The alternative is to find a specialist mortgage lender for people with IVAs.
Mortgage applications and rates vary from person to person. However, with a specialist IVA mortgage lender, any offer you receive will likely have a higher rate of interest applied to it. You will also probably find that the amount of deposit you’re asked to pay upfront will be higher than normal.
However, if your current financial circumstances indicate you can afford to keep up with the repayments, you may be able to secure the mortgage.
Getting a mortgage following an IVA is possible. It can be challenging though and may require patience before you can get the best offers. If you have any questions about it, you can contact us and we’ll be able to determine whether an IVA – and obtaining a mortgage – is feasible.
If you currently have a mortgage, your property could be affected if you choose an IVA. During the final year of the agreement, you might have to remortgage your home if it possesses more than £5,000 worth of equity.
If this isn’t possible, you may need to extend your IVA by another twelve months.
If you have any questions about how an IVA will affect you, or your mortgage application, get in touch with one of our advisors today. We’ll be happy to examine your circumstances and determine whether an IVA is the best solution for you.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
Call charges may vary depending on your telephone provider. All calls are recorded for training and compliance purposes, but deleted after 6 months for non-customers in line with GDPR guidelines.
Free money help and advice can be found at the MoneyAdviceService.org.uk