Remortgaging after an IVA

After you enter into an Individual Voluntary Arrangement, there are a couple of reasons why you might want to try and remortgage your home.

Firstly, it could be that you’ve completed your IVA and it’s dropped off your credit file (6 years from the point it began) and you want to either upsize to a family home or downsize to a smaller property and release some of the equity in your home in the process.

Or…

You might be trying to remortgage to raise a lump to sum to actually pay off part or all of your IVA. This is sometimes allowed by your Insolvency Practitioner (IP), if it’s felt that it’s best both you and your creditors.

In both cases, you’ll more than likely have to turn to the specialist lenders to facilitate your remortgage needs. If you apply to one of the high street banks in the standard way, you’re not going to have much luck in getting your application accepted.

Specialist lenders

Whatever your plans, your remortgage is going to have to be shown to be affordable to you and you’ll need to prove your income. Obviously, if you’re still in your IVA, this does complicate the issue and the rates you’re offered are going to reflect the situation you’re in.

In most cases, you will be remortgaging after your IVA has fallen off of your credit file, once it has been settled and expunged. In this situation, your credit rating will probably still be low and you’ll be looking at ways to improve it and increase your chances of being accepted.

The specialist lenders we mentioned before are the ones that a) will be much more forgiving in taking more than just your rating into account and b) are going to have access to the deals that cater for people with circumstances likes these.

For information on applying for a mortgage in this situation, take a look at our IVA mortgage page.

The criteria

When you remortgage, there will still be certain criteria that need to meet in order to be considered, irrespective of your own, personal financial status. Such as:

  • The amount secured against your home should not exceed 85% of its loan to value
  • The amount of equity released should not exceed the total quantity of unsecured debt
  • The length of the new remortgage terms should not go beyond the applicant’s retirement age
  • A minimum of £5,000 must be released in the process of the remortgage

There are occasions when a remortgage whilst still in an IVA only pays off part of the outstanding debt. In this instance, the increase in mortgage payments will usually be reduced from the monthly cost of the IVA.

If you want to find out more about increasing your credit score after an IVA, take a read through our IVA credit file cleanup page. Alternatively, you can speak to one of our recommended mortgage brokers about the options available to you.

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