Can I Get a Mortgage During an IVA?
As the vast majority of Individual Voluntary Arrangements last for between 5 and 6 years, a lot can happen during that period. Life has a habit of carrying on, come what may and 6 years is a long time to wait for your IVA to clear from your credit file.
The question has to be, is it possible to get a mortgage whilst you’re still in an IVA?
It is possible, but it is difficult and you will have to meet quite certain requirements and affordability criteria, but it is possible. The reason for the difficulty is that if you’ve arrived at a position where you need an IVA, your credit rating is going to be poor and poor credit ratings don’t typically end up in successful mortgage applications.
Most find it better to wait until the IVA is complete and dropped off your credit file, 6 years after the start date. See our Mortgage after an IVA page.
Whilst the previous statement is true in most cases, the result can be different if you approach a specialist broker who has access to special deals that are geared towards people with an imperfect credit status. It’s true that applying for a mortgage when you’re in an IVA via traditional routes is something of a pointless task, as they only look at your income and your credit rating, but bad credit mortgage criteria will be much broader and flexible.
If you can prove affordability, there’s a chance that you could be approved even whilst you’re in an IVA, but we’re not going to lie, lenders do prefer applications where the IVA has been satisfied and is no longer showing on your credit file, but mortgages during IVAs are not unheard of.
It will probably require a significantly higher deposit than if you were not still in your IVA and the rates available to you will likely be higher, but it is possible.
One factor that could put a stop to your mortgage dreams whilst still in an IVA is your Insolvency Practitioner (IP), who might not agree with you borrowing before the end of your arrangement. If you go ahead with it without their agreement, it could mean your IVA fails.
That’s not to say that they won’t agree, but most usually this is only allowed in an IVA remortgage situation where you’re releasing equity from your existing property to free up a lump sum to pay off your IVA in full.
Where first time buyers are concerned, an instance where your IP might agree to your move of buying a home is when your overall monthly expenditure falls. Rental prices are typically a good deal higher than mortgage repayments, so it could actually be a good move for your creditors too, even though you’re borrowing again before your IVA has finished.