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IVA Mortgage Guide 2024

Each mortgage lender has its own criteria for IVA mortgages and other types of bad credit mortgage applications. An IVA (Individual Voluntary Arrangement) will affect your mortgage application so it’s understandable to ask ‘can you get a mortgage with an IVA?’.

Firstly, you should know that there’s actually no such thing as an IVA mortgage, because they’re the same as traditional or standard mortgage. Typically, the only difference with getting a mortgage with an IVA is that you will usually pay a higher interest rate and you will have extra financial checks.

According to the latest figures from the Insolvency Service, the number of IVAs registered in the UK reached an all-time high in 2022 with 87,865 recorded in England and Wales. The report showed that IVA numbers have consistently increased over the past 20 years, however they have reduced in 2023 with 64,050 registered.

In this section, we look at how IVA mortgages work and our team of mortgage experts explain how to get the best mortgage deals with an IVA. Even though an IVA can make getting a mortgage more complicated, there are still quite a few options and you can also do quite a few things to save yourself time, money, and unnecessary stress.

IVAs can be difficult and stressful which is also another reason why you should get proper advice and speak to your insolvency practitioner. You can also get advice from several government bodies or charities, such as:

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1 Minute Mortgage – Can you get a mortgage with an IVA 2024?

There have been record numbers of Individual Voluntary Arrangements (IVAs) in the past 3 years, mainly due to the extra financial difficulties from the ‘Cost of Living Crisis’. Households have been under constant financial pressure for several years with record high inflation rates and increasing mortgage rates.

We’re seeing more people applying for mortgages with IVAs in recent times and the need for affordable mortgage deals with other types of bad credit.

  • IVA mortgage deals will vary dramatically from one mortgage lender to another and you should make sure that you only apply to a lender that accepts IVAs.
  • Mortgage rates for people with IVAs will generally be several % higher than a typical standard mortgage application from a Highstreet mortgage lender.
  • Timing is an important factor for people applying for a mortgage with an IVA and you should also be aware that an IVA only remains on your credit file for six years, but you may still need to declare it.
  • You should ideally get proper advice from an IVA mortgage specialist who will have experience in dealing with this type of application and these scenarios.

Ultimately, your mortgage options will certainly be more limited if you’ve got an IVA or you are in an IVA when you apply for a mortgage. This doesn’t mean that you won’t be able to get a mortgage with an IVA, but it does mean that it can certainly be more complicated and you will usually pay a higher interest rate.

Most of the main Highstreet mortgage lenders won’t consider mortgages for people with IVAs and they can be quite strict with this. You should however have a number of options from some of the specialist mortgage lenders.

You can also improve your chances for getting a mortgage with an IVA if you prepare yourself and make sure that you speak to a qualified bad credit mortgage specialist. It’s important to remember that you need to take the right steps and avoid making several mortgage applications because multiple credit searches can also be a bad thing.

Common errors people make when applying for a mortgage with an IVA:

  • Apply for a mortgage online or use a fee free mortgage company
  • Try to get a mortgage with their bank or building society
  • Don’t have a big enough deposit or enough equity

Mortgage lenders are having to be more flexible with IVA mortgage applications in the current economy, but also there are more specialist mortgage lenders than there have been in previous years. If you’ve been refused a mortgage recently because of an IVA then you should get proper advice from an IVA mortgage expert.

An Individual Voluntary Arrangement (IVA) was introduced in England and Wales in the mid 80’s, governed by Part VIII of The 1986 Insolvency Act.

The purpose of an IVA was for creditors to be able to offer an alternative solution to bankruptcy for individuals with unsecured debts that they could not pay. The equivalent in Scotland is known as ‘Protected Trust Deed’, which is a statutory debt solution.

An IVA is usually administered by an ‘insolvency practitioner’ who is an expert in debt arrangements. This person or company would make an agreement between the individual and their creditors to combine all outstanding debts in to one single more manageable debt and payment arrangement.

In the video below from ITV‘s This Morning, financial journalist Martin Lewis explains more about how IVAs work and other ways to manage and repay debts.

How Do I Start Repaying My Debt? | This Morning

This would then form part of an IVA, which is an arrangement to repay the debt in one manageable monthly payment, usually over 5 or 6 years and any remaining debt would be written off at this point.

An IVA can be a positive step towards recovering from a period where debts were unmanageable or unaffordable. This can give an individual or a family, time to recover and become solvent again.

The main thing to remember here is that an IVA will remain on your credit file for 6 years, from the date that the arrangement was made.

After 6 years, the IVA will be removed from your credit file completely and no longer be visible to mortgage lenders or other financial institutions. You should also be aware that it will be easier to get a mortgage as you progress through your IVA and not just at the end of the arrangement.

Your ability to get a mortgage will gradually improve throughout the six year period, and then dramatically at the end.

It is more difficult to get a mortgage during an IVA because of the risks that mortgage lenders will want to avoid. There are also issues with being able to get a mortgage or any other type of credit while you’re in an active IVA.

During an active IVA, your insolvency practitioner has control of any financial arrangements which makes getting additional credit more complicated. The company or person that is managing your IVA should be able to tell you whether it is even possible to apply for a mortgage or any other type of credit (e.g. a new credit card).

You might also need to remortgage as part of the terms of your IVA and so you could be asked to do this under the agreement. This usually happens six months before the IVA end date and the proceeds would be used to satisfy your IVA (if possible or required).

It might also not be possible to remortgage during your IVA for a number of reasons and so your insolvency practitioner will decide this.

The best options when looking for a mortgage with an active IVA:

  • Speak to a qualified mortgage expert that is used to dealing with customers in your situation and that has lenders who offer loans for people with IVAs.
  • Find a specialist lender that offers the mortgages to people with an active IVA.
  • Deposits and equity will also help with getting a mortgage with an active IVA because a lower Loan to Value (LTV) which reduces the risk for mortgage lenders.
  • Higher mortgage rates are going to be something that you will have to accept, so you will need to factor this in to your mortgage repayments.

You also need to be aware of the ‘Windfall Clause’ in an IVA which applies to acquiring an asset during the arrangement, such as purchasing a property. It is a legal requirement for you to inform your insolvency practitioner about anything like this.

It will be easier to get a mortgage after an IVA has ended and generally, it will be even less complicated after the six-year period has ended, when the IVA comes off your credit history. Your options will still be limited for a while after your IVA has come to an end or from the end of the six years.

Most mortgage lenders will still want to know about the details of the IVA for a period after it has ended and beyond the six years. You might still need to declare your IVA for several years until it is no longer a consideration for mortgage lenders.

All bad credit mortgages will have a minimum deposit requirement of 15% or you will be able to get a maximum of 85% loan to value. You should also consider that a bigger deposit or lower loan to value will give you a greater chance of getting a mortgage with an IVA.

Most mortgage lenders will allow a maximum of 85% loan to value or a 15% deposit, but you will also generally pay higher interest rates for these. If you’ve got a bigger deposit of 30% or more then you could find it easier and cheaper to get an IVA mortgage deal.

For new mortgage applications with an IVA on your credit report, you must tell your mortgage lender or mortgage advisor about it. Your credit history will generally show this on your score anyway and so it’s pointless to lie about your financial circumstances.

If you purposely fail to declare an IVA on your mortgage application then you’ll actually be committing mortgage fraud, which could lead to further problems. Honesty is definitely the best policy and it’s highly unlikely that you would be able to get away with it anyway.

There are also several charities and support services for people who are in financial difficulties such as StepChange and Citizen’s Advice.

There are several options when you apply for a mortgage with an IVA, however some of these options aren’t necessarily good for people with bad credit.

When you apply for a mortgage, you will be asked questions about your credit history and you will need to give permission for the lender to view your credit report. A lender will assess the viability of your loan mainly based on your credit score and affordability.

The best place to get a mortgage with an IVA is to speak to a specialist mortgage broker who knows about IVA’s and has suitable lenders for you.

Top reasons why you should speak to an IVA mortgage specialist:

  • Higher chance of acceptance
  • Specialist lenders for people with IVAs
  • Lower mortgage rates and better deals
  • Save time and money
  • Advice on debt recovery

IVA Mortgage Specialists will also be able to advise you on how you can improve your credit in the future and when you can get lower rates in the future.

More and more lenders are accepting applications for mortgages with IVAs because of the increasing numbers of people in this situation. There are also more specialist mortgage lenders entering the market which automatically gives more options and flexibility for IVA mortgages.

In 2007 following the mortgage crash, there was an instant reduction in the numbers of specialist mortgage lenders and deals. This has since steadily increased and especially over the past several years since the cost of living crisis which causes extra financial pressure on households.

Top mortgage lenders for people with IVAs:

Most of these lenders will only accept mortgage applications through a broker or a mortgage adviser, so you should get proper advice on which is the best lender for you. Mortgages with IVAs are also based on several other factors, such as affordability, employment type, and credit score.

There are lots of ways to improve your chances of getting an IVA mortgage and preparing yourself for your mortgage application. A good mortgage advisor or IVA mortgage specialist should be able to talk you through this to help you to prepare yourself.

It is however, still quite likely that the IVA will have an impact on your credit score for several years, because of mismanaged debts. This means that your score could reflect on your mortgage applications to lenders for a considerable amount of time.

Best ways to improve your credit score with an IVA:

  • Don’t apply for too much credit as this will show on your credit file and will damage your credit score.
  • Manage any debts properly and make payments, which means that you won’t show any further missed credit payments on your credit record.
  • Give it time because once your IVA has been satisfied, it can take up to three months for this to be reflected on your credit file.
  • Maintain some stability with your credit and your income to show that you have properly managed your finances over time.

It is important to be patient and to make sure that you’re as careful as you can be after you’ve had an IVA. Lenders will look at your credit and financial behaviour afterwards to make sure that this wasn’t a consistent issue.

Once you have satisfied your IVA and have come to the end of your six year period, the IVA should be removed from your credit file. You might still be asked about this with some mortgage lenders and you still might need to disclose it, but this isn’t the same for all lenders.

When you apply for a new mortgage or a remortgage after six years, you should find that you will be considered a standard borrower. Most mortgage lenders won’t ask for any details of satisfied IVAs over 6 years ago.

This should mean that you will be able to get a mortgage deal from standard high street lenders and at standard rates.

Getting the best advice from a qualified mortgage specialist can save you significant time and money, as well as the stress of being refused or declined.

Our team of qualified IVA mortgage experts have helped thousands of customers with all types of credit issues. We have a carefully selected panel of specialist lenders that offer the right deals for all types of credit profiles.