Mortgage with IVA
Another common type of bad credit in the UK is an Individual Voluntary Arrangement (IVA) which can have an impact when applying for a mortgage.
When you have an IVA on your credit file or in your credit history, lenders will look at this to assess your eligibility for a loan. There are many reasons for someone having an IVA and it may not even be your fault.
According to recent official government statistics, there were 81,199 IVA’s registered in England and Wales in 2021. This is the highest figure ever recorded and accounted for nearly three-quarters (74%) of all individual insolvencies.
What is an IVA?
Individual Voluntary Arrangements (IVA’s) were 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 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 debt.
How long does an IVA last?
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. 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.
How long does an IVA stay on your credit file?
The main thing to remember here is that an IVA will remain on your credit file for 6 years, from when the agreement was made.
After 6 years, the IVA will be removed from your credit file completely and no longer be visible to lenders or other financial institutions. You should also be aware that it will become easier to get a mortgage as you progress through your IVA and not just at the end.
Your ability to borrow will gradually improve throughout the six year period and then dramatically at the end.
Can I get a mortgage with an IVA?
Many people are concerned getting a mortgage with an active IVA or even a settled IVA.
The reality of ‘can you get a mortgage with an IVA?’ is that you can and usually it will be through a specialist lender. There are more options in the current mortgage market than there have been in previous years, which is a positive.
Our team of fully qualified mortgage experts has many years of expertise in dealing with lenders for IVA mortgages. We understand this particular area of bad credit more than most and have specialist lenders who can help.
The simple answer is that you should be able to get a mortgage or remortgage with an IVA, regardless of whether it is satisfied or active.
Can you get a mortgage with an IVA in place?
The best place to start when you’re looking for a mortgage with an active IVA is to speak to your insolvency practitioner.
Your insolvency practitioner has control of your financial arrangements while your IVA is still active. They will be able to tell you whether they think that a mortgage is an affordable option for you, while still paying your arrangement.
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 IVA’s
- Find a specialist lender who offers the best mortgage deals and rates for people with an active IVA
- Deposits and equity can help with getting a mortgage with an active IVA because a lower Loan to Value (LTV) will also be useful as it reduces risk for the lender
- 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
How to get a mortgage with an IVA
There are many options when you apply for a mortgage, but these options can be more limited for people with IVA’s and types of other bad credit.
When you apply for a mortgage, you will be asked questions about your credit history and you will need to give permission 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 qualified specialist who knows about IVA’s and has suitable lenders for you.
The main 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
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.
For more information on securing a mortgage with poor credit history CLICK HERE.
Mortgage lenders with an IVA
There is an increasing number of specialist lenders and lenders that will accept people with IVAs.
We have a panel of over 50 carefully selected lender partners, including several specialist lenders for people with bad credit mortgages. It is our mission to find you the very best deal based on your circumstances and credit history.
Some of our specialist lenders include:
- Accord Mortgages
- Aldermore
- Bluestone
- BM Solutions
- Kent Reliance
- Precise Mortgages
Each of our lenders has their own criteria for IVAs depending on your situation and needs.
Can I improve my credit score to get a mortgage after having an IVA?
As mentioned above, an IVA will remain on your credit record for six years from the point of the agreement being made.
It is however highly likely that this could have an impact on your credit score for several years, due to mismanaged debts. This means that your score could reflect to lenders that there have been issues in the past.
Some of the best ways to improve your credit score are:
- Don’t apply for credit too much as this will show on your credit file and can reduce your credit score
- Manage any debts properly and make payments which means that you won’t show any missed credit payments on your 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 report
- Maintain some stability with your credit and your income to show that you have properly managed your finances over time
Mortgages with a satisfied IVA over 6 years ago
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.
When you apply for a new mortgage or a remortgage after this period then you should find that you will be considered a standard borrower. Most 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.
Mortgage specialists for IVAs
Getting the best advice from a qualified mortgage specialist can save you significant time and money.
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.
Useful resources
Citizen’s Advice – Check what an IVA is
Gov.uk – Options for paying off your debts: Individual Voluntary Arrangements