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Getting a Mortgage Or Remortgage After an IVA

Applying for a mortgage or remortgage after an IVA? Read our guide to find out what your options are and how to choose the right one.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 9, 2022

Most borrowers are aware that being in an individual voluntary arrangement (IVA) can significantly reduce any options you may have when it comes to new credit, especially mortgages.

But what about getting a mortgage after an IVA or remortgaging with on your file? In this guide, we will answer these questions and explain how a specialist bad credit broker can help you secure the finance you need.

Can you get a mortgage after an IVA?

Yes. You can get a mortgage after an IVA, though you’ll likely get a better deal if the issue is historical. The longer the IVA has been on your credit file for, the better, but that doesn’t necessarily mean you have to delay your plans significantly to get approved by a lender.

You’ll likely get the best deals once it drops off your credit file after 6 years or once you’ve finished paying it off, if it takes longer than 6 years. There are, however, specialist lenders who will consider you for a mortgage as soon as the IVA has been satisfied, and even mortgage providers who might consider you during the IVA.

If you’re applying for a joint mortgage when one applicant has bad credit, (e.g: partner has an IVA)  then both of your circumstances will be taken into consideration and looked at, that includes your partner’s IVA or other bad credit issues.

How long should you wait before you apply?

Most experts will tell you the longer the better, because older IVAs are less likely to cause an issue than recently registered ones. Some lenders will decline anyone who’s ever had an IVA; some require the issue to have been settled years before and no longer appearing on your credit file.

Other lenders demand the IVA to have been settled and paid off 3 years before they will consider an application and some lenders want it to be settled prior to application.

With an active or recent IVA, you will need the help of a bad credit mortgage broker to get approved for finance. They have deep working relationships with specialist mortgage providers who have the flexibility to take the age, severity and reason for your IVA into account before making a final lending decision.

Did you know… You could access 30% more of the mortgage market with a specialist Bad-Credit broker on your side – Get Started with an OMA-Expert to unlock more deals and increase your chance of mortgage approval.

Will your interest rate be higher?

This is a possibility as IVAs are generally considered to be a severe form of bad credit, which means lenders might see you as a higher risk if you are applying for a mortgage with one on your file.

The perceived risk to the lender is always going to be higher when lending to someone who already has arrangements on unpaid debts. Understandably, this will have a knock-on effect on rates charges.

You should expect to pay rates higher than a regular mortgage would charge and the amount of deposit required is between 30-40% of the property value (ie. a maximum loan of £140,000 on a £200,000 house).

There are, however, ways you can bring down the risk and increase your chances of avoiding a high interest rate. They include…

  • Putting down extra deposit if possible: Bad credit mortgages tend to have higher deposit requirements than the standard 5-10% requirement that most residential mortgages have; but the more you’re able to put down, the more likely you are to avoid a hefty interest rate.
  • Wait until the issue has been satisfied: IVAs remain on your file for six years. You can apply for a mortgage before this point, but the older the issue, the less likely it is to cause major problems for your application.
  • Pay off any other debts that can be settled: If you have any other debts and are in a position to settle them, it’s recommended that you do so, as this will strengthen your application.
  • Speak to a bad credit mortgage broker: Mortgage brokers who specialise in bad credit help people get a mortgage after an IVA every day. They have deep working relationships with lenders who are sympathetic to applicants under these circumstances and can boost your chances of approval dramatically.

How to get a mortgage after an IVA

Here are the steps to follow to boost your chances of landing a good mortgage deal after an IVA…

  1. Download your credit reports: Since having an IVA might make some lenders view you with caution, it’s a good idea to make sure the rest of your credit history is as impeccable as possible. Download all of your credit reports and check they are fully up to date. Challenge any inaccuracies and have outdated information removed.
  2. Get all of your documents ready: This is a time-saving step that will help things progress smoothly when you’re ready to progress with your application. Your lender will need to see three months’ bank statements to evidence your income and prove your IVA has been settled. You can find a full list of the documents you’ll need in our guide to mortgage applications.
  3. Speak to a bad credit mortgage broker: We can match you with a mortgage broker who specialises in arranging mortgages for people after an IVA. Their knowledge, expertise and lender contacts can boost your chances of landing a favourable interest rate, as many bad credit lenders offer broker-only deals you wouldn’t have access to if you were to apply direct.

Make an enquiry with us today and we’ll set up a free, no-obligation chat between you and a broker who helps people get a mortgage after an IVA every day.

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See how our customers managed to borrow more after they were matched with a specialist broker.

Victoria
Devon, UK
We found it hard to get a mortgage because I have an IVA. I thought my boyfriend’s clean credit would work in our favour but the first lender we saw turned us down and the second was only willing to offer us a mortgage with a ridiculous interest rate. Tom our broker instantly put our minds at ease, did all of the legwork tracking down a specialist bad credit lender and we got approved.
Dee
London, UK
Nationwide declined my mortgage application due to having no credit history, which felt so unfair. I've always been good with money, hence not needing any credit but that stung me. Online Mortgage Advisor found me a lender willing to accept my application, and I'm so thankful that they did!

Remortgaging with an IVA

Having an IVA on your file doesn’t mean you can’t remortgage, but your chances of approval will increase if the IVA has been satisfied and no longer appears on your credit report. To get approved, most lenders will want to see that you have made your mortgage repayments satisfactorily throughout the time you’ve had the IVA.

Every remortgage lender is different in their criteria and each will have a different stance on how they interpret the impact of an IVA, historical or current; but the good news is that it’s possible to…

  • Remortgage to pay off an IVA
  • Remortgage while still in an IVA
  • Remortgage after an IVA

The criteria for a remortgage during or after an IVA is the same as it is for a mortgage, although you don’t need a deposit in the traditional sense since the equity in your property covers this.

Some lenders will only let you remortgage with a current IVA if the purpose of the funds is to settle the issue and you’ll likely need at least 30-40% equity to get approved.

What if you have other credit issues as well?

If you have an IVA it’s also likely you’ll have other associated credit issues that led up to the arrangement being made. Usually, these start with late payments when the issues leading to the IVA began (often caused by a life event like separation or bereavement) that then develop into defaultsCCJs and debt management plans.

An IVA is usually taken as an alternative to declaring bankruptcy, so many who enter them tend to avoid both bankruptcy and repossession.

Mortgage lenders who accept the IVA are usually accepting of the preceding issues that underlie it, but this depends on the date the IVA was registered and also the payment conduct since.

If you have had numerous issues and entered an IVA very recently, then the amount of deposit you need will be higher, as will the rate of interest you’ll pay.

Finally, if you have any payday loan usage on your file in addition to the IVA, getting approved could be less straightforward. If you’re applying for a mortgage after a payday loan, you might find your options limited as most lenders are wary of customers who’ve had to fall back on them.

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Get matched with a bad credit mortgage broker

If you’re considering applying for a mortgage or a remortgage after an IVA and want to know all your options, you should speak to a mortgage broker who specialises in bad credit. We work with mortgage advisors who help people under these circumstances every day, and their expertise could be the difference between mortgage approval and missing out.

Call 0808 189 2301 or make an enquiry for a free, no-obligation chat. We’ll match you with a broker who has in-depth experience helping other customers get a mortgage or remortgage after an IVA.

FAQs

Could I lose my home with an IVA?

No. One of the main advantages of opting for an IVA over a bankruptcy order is that your home is protected and you don’t need to sell it in order to pay off your debts. With an IVA, you’ll pay back a set amount each month for a number of years (typically 5) and you should be able to keep your home, so long as you keep up with the payments.

If you’re unable to meet the payments, your insolvency practitioner can ask the court to make you bankrupt, from which you would be more likely to lose your home.

Can I sell my house while in an IVA?

You could sell your property and buy a cheaper one, though once you factor in the additional costs such as legal fees, evaluation fees, stamp duty etc, you may not have raised as much as you’d like.

If your creditors arrange an IVA, you’ll pay back a set amount per month for a number of years (typically 5), then during the last year they’ll typically ask you to obtain a valuation of your property.

If you have enough equity in your home, they may ask you to attempt to remortgage to release equity and pay off the remainder of your loan. If you don’t have enough, then you’ll pay for a further 12 months.

Once your IVA is complete you are free to sell your home, though it’s better to wait until you have your IVA completion certificate. This certificate is confirmation that you have completed your IVA and you no longer owe any debts to creditors.

You may also wish to wait to be removed from the Insolvency Register (which typically happens 3 months after you receive your completion certificate).

Ask a quick question

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Bad Credit Mortgages

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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