Can I get a mortgage with an IVA?
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Can I get a mortgage with an IVA? (Part 1)
Carly Ashburner explains whether you can get a mortgage with an IVA.
What is an IVA and how does it work?
IVA stands for Individual Voluntary Arrangement. This is a legal agreement between you and those you owe money to. Your debts can be consolidated and frozen, so no more interest is accrued.
You agree to pay off a percentage of your debt over a given period of time. Provided you maintain the payments, unpaid debt is written off at the end of the IVA.
Can you get a mortgage with an IVA? How long after an IVA can I get a mortgage?
When you’re in an IVA, your credit score would be negatively affected and you’ll be unable to borrow large sums of money. Most mainstream lenders won’t consider you for a mortgage if you have an IVA on your credit file.
Once the IVA has finished, there are lenders that will consider you for a mortgage. Generally speaking, the IVA needs to have finished one year ago.
We’d need to look to specialist lenders, who tend to charge higher interest rates and require a larger deposit as you are seen as a higher risk.
What are the lending criteria for a mortgage after an IVA?
Every mortgage lender will have their own lending criteria for mortgages with IVAs. Some lenders will only consider applications where the IVA has been cleared for several years, while some are happy to lend to those with more recent IVAs.
The general lending criteria such as minimum income, employment status and property type will still apply for those with an IVA.
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How much can you borrow with an IVA and what deposit will you need?
The amount you can borrow is determined by your income and affordability. Having an IVA on your credit file should not impact how much you can borrow. The deposit size can vary, depending on how long ago the IVA was registered. You could be asked to provide a 20% deposit.
Can you pass a credit check with an IVA?
It’s unlikely you’ll pass a credit check with an active IVA. Once the IVA has passed, it will depend on the lender’s attitude to lending to applicants with this type of credit history.
Do I have to declare an IVA on my mortgage application?
Lenders will conduct a soft credit search on applying for a mortgage decision, which will inform them if you have an IVA.
It’s right to be honest and upfront about your credit history with your mortgage broker so that they can find a suitable mortgage for you, and avoid delays in the process.
All lenders will conduct a credit search during the application process, so it will come to light at some stage. It’s right for everyone if that’s early on in the process.
Will I need to pay a larger deposit or higher interest rate for a mortgage after an IVA?
Yes – generally lenders will ask for a higher deposit and you will typically pay a higher interest rate, as applicants with previous IVAs are seen as higher risk.
How long does an IVA last? How long does an IVA stay on your credit file?
An IVA is usually for 60 months and it stays on your credit file for six years.
Does an IVA affect your credit history? How badly does an IVA affect your credit rating?
If you get an IVA, it’s recorded on your credit report and your credit score will go down as a result. A lower score makes you unattractive to many lenders and fewer are willing to lend.
How can I improve my credit score after an IVA?
You can improve your credit rating by making on-time repayments to any existing commitments, having fewer open accounts and avoiding payday loans or short-term finance like Klarna.
How can a mortgage broker help here?
To increase your chances of getting a mortgage with an IVA, it’s right to work with a mortgage broker. We can help you find a lender that’s a good fit for your circumstances and guide you through the application process.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
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