I’ve previously had an IVA, can I get a mortgage?
An Individual Voluntary Arrangement (IVA) is usually taken as an alternative to going bankrupt.
It is fairly common knowledge that having previously being in an IVA is going to harm your chances of obtaining credit, especially when it comes to getting a mortgage. The good news is that there are mortgage brokers who specialise in making special arrangements for people in this type of personal situation, as long as you have the requisite amount of deposit and that you meet the lending criteria in terms of affordability.
For those who qualify, there are possibilities to:
- Obtain a mortgage/remortgage after completing an IVA
- Obtain a mortgage/remortgage whilst in an IVA
- Obtain a remortgage to pay off an IVA
So, What does an IVA Mortgage look like?
For all intents and purposes, an IVA mortgage is like any other, but the process to obtaining one may take a little more time, due to the amount of information you’ll be asked to provide. Don’t worry, you’re not going to be buried in paperwork, but you will have to provide information relating to the particulars of your IVA, your provable income and your credit reports from the three major credit reference agencies in the UK; Equifax, Experian and Callcredit (Noddle).
In an ideal world, to get the best offers, you will need to have had a good record of paying your IVA from when you first took it out. Each lender will have a different set of criteria, with a different opinion on the impact of an IVA, but most will harbour a willingness to lend to people when affordability can be displayed.
How Long do I have to wait after my IVA to get a Mortgage?
There are a number of different types of lenders out there:
- Some mortgage companies will simply turn down all applicants who have been in an IVA.
- Some lenders state that the IVA must have been settled more than 6 years before, so that it has dropped off of their credit record completely
- Some stipulate that the IVA must have been settled at least 3 years previously
- Some mortgage providers just need it to be cleared prior to applying
- Some lenders are happy to give you a mortgage with the proviso that it’s used to clear an IVA
- Some mortgage companies are even happy to provide mortgages to those who are still in an IVA
As you can see, there’s a range of options available. A good rule of thumb is to work on the assumption that the longer ago your IVA was set up and/or cleared and the less other credit issues you have on your file, the less deposit or equity you’re going to need and the lower the cost of borrowing. A specialist mortgage broker will have access to very competitive rates the moment your IVA drops off your credit file, 6 years after the start date. Your best bet is to speak to a broker who understands your situation.
The visible risk to the mortgage provider is obviously going to be lower when it’s to someone who doesn’t have previous arrangements for uncleared debts, which is why the rates you’ll find on offer are lower on the high street. Typically speaking, you’re going to need to pay a 15-20% deposit e.g. £30k on a £200k property. The larger the deposit percentage the better!
Mortgage companies that are open to lending those with an IVA on their credit file are quite accepting of the certain parts of the situation, but much rests on the date the IVA was begun and whether you’ve been able to pay it on time since.
The good news is that it is possible to get a mortgage if you have or have had an IVA in your credit history, it’s just a question of how long ago it was.