Mortgage after an IVA
Ready to explore your mortgage options after an IVA?
Don't let an IVA hold you back from owning a home. Reach out to our specialist mortgage advisors to start your journey to homeownership today!
Securing a mortgage can often feel like navigating a maze, and this is even more true if you’ve been through an Individual Voluntary Arrangement (IVA). Whether you are looking to obtain a mortgage after an IVA or you are currently in an IVA and wondering about your mortgage options, this guide is designed to offer you key insights and help you understand your choices.
With the complexities associated with an IVA, it’s important to be well-informed when considering mortgages. This guide will focus on two main scenarios – getting a mortgage after an IVA has been completed and securing a mortgage while still in an IVA. We will delve into the impact of an IVA on your credit score, the perceptions of lenders, potential restrictions, and how you can improve your chances of mortgage approval.
By understanding the intricacies of obtaining a mortgage after an IVA or with an IVA, you can make more confident decisions on your journey to homeownership. With clear and concise information, this guide aims to illuminate the path forward for those grappling with these financial challenges.
A mortgage after an IVA, sometimes referred to as an “IVA mortgage,” is a home loan that you apply for once you have completed your IVA. It can be more difficult to secure a mortgage after an IVA because having one on your credit report can make lenders view you as a high-risk borrower. However, it’s not impossible, and there are lenders who specialise in providing mortgages to individuals who have completed an IVA.
The terms of the mortgage, such as the interest rate and the deposit required, will likely be less favourable than those for individuals with a clean credit history. But over time, as you rebuild your credit and show that you can manage your finances effectively, you may be able to remortgage or negotiate better terms on your home loan.
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between a person and their creditors to help pay off their debts over a specific period. It’s one of the strategies available under the UK insolvency laws to individuals who are in financial distress.
The IVA process is supervised by an Insolvency Practitioner, a qualified professional who acts as an intermediary between the debtor and the creditors. The debtor agrees to make regular payments to the Insolvency Practitioner, who then distributes these payments among the creditors.
IVAs typically last five to six years, and any remaining debt after this period is usually written off. This agreement can be a more flexible alternative to bankruptcy, as it allows the debtor to retain more control over their assets and may have less of a detrimental impact on their credit rating in the long run. However, it’s important to note that IVAs are a form of insolvency and thus can still have significant consequences for a person’s financial situation and credit history.
During the term of the IVA, interest and charges on the person’s debt are usually frozen, and creditors can’t demand additional payments. It’s important to keep up with the payments in an IVA, as failure to do so can lead to bankruptcy.
Yes, you can apply for a mortgage after an IVA, but it can be more challenging than if you hadn’t had one. An IVA remains on your credit report for six years from the date it was set up, and lenders may see this as a sign of higher risk.
However, several factors can influence your ability to get a mortgage after an IVA:
Time since discharge: The longer the period after your IVA has been completed, the better your chances of securing a mortgage. Some lenders may consider your application as soon as your IVA is completed, while others may require you to wait a few years.
Deposit size: A larger deposit can make you a less risky prospect to lenders. You may need to save for a larger deposit if you’ve had an IVA in the past.
Your credit history since the IVA: Lenders will want to see that you’ve managed your finances well since your IVA. This means not missing any repayments and not taking on excessive debt.
Affordability: As with any mortgage application, lenders will assess your income and outgoings to ensure you can afford the mortgage repayments.
The lender: Different lenders have different criteria. Some high street banks may be reluctant to lend to someone who’s had an IVA, but there are specialist lenders who consider applicants with IVAs.
It may be beneficial to speak with a mortgage broker who has experience in adverse credit situations, as they can help you understand your options and find lenders who are more likely to consider your application. Remember, each lender’s criteria can vary, so what may be acceptable for one lender may not be for another.
Getting a mortgage while you’re still in an Individual Voluntary Arrangement (IVA) is challenging and, in most cases, unlikely. This is because an IVA represents a significant financial hardship and is viewed as a serious credit issue by lenders.
Most lenders will require the IVA to be fully satisfied and a certain amount of time to have passed before they will consider a mortgage application. This could be as much as six years after the completion of the IVA, as it remains on your credit report for this length of time.
However, there are some specialist lenders who cater to those with adverse credit histories, including those in an IVA. These lenders typically require a larger deposit (often 25-30% or more), and the interest rates offered may be higher than standard mortgage loans due to the perceived risk involved.
Another point to consider is that you would typically need permission from your insolvency practitioner to take on more credit while in an IVA, including a mortgage. It’s always advised to discuss this with your insolvency practitioner and seek advice from a mortgage broker who has experience with IVAs and adverse credit situations.
Applying for a mortgage after an Individual Voluntary Arrangement (IVA) in the UK involves a few key steps, many of which are similar to the standard mortgage application process but with additional considerations due to the IVA.
Here’s a general overview of the process:
Check Your Credit Report: It’s essential to review your credit report to understand your financial situation fully. Make sure the IVA is marked as “complete” or “satisfied” and that all the information on your report is accurate.
Improve Your Credit Score: Start rebuilding your credit score as soon as possible. You can do this by paying your bills on time, staying within your credit limits, and avoiding taking on too much new debt. It may also be helpful to use a credit-building credit card.
Save for a Deposit: You’ll likely need a larger deposit than usual after an IVA, potentially around 25-30% of the property’s value. The larger your deposit, the lower your Loan-to-Value (LTV) ratio, which can increase your chances of approval.
Consider Timing: While some specialist lenders may consider you as soon as your IVA is completed, others may require you to wait a few years. The longer you wait, the better your chances.
Affordability Assessment: As with any mortgage, you’ll need to demonstrate that you can afford the repayments. This involves an assessment of your income and outgoings.
Find a Specialist Lender or Broker: Some high-street banks may be unwilling to lend to someone who’s had an IVA, but there are specialist lenders who may consider your application. A mortgage broker who has experience with adverse credit situations can help you find suitable lenders.
Application: When you apply, be honest about your financial history. The lender will find out about your IVA through the credit check process, so it’s better to be upfront about it.
Yes, while getting a mortgage after an IVA can be challenging due to the impact on your credit history, there are some lenders in the UK that specialise in providing mortgages to people with adverse credit history, including IVAs.
The specific lenders available can change over time, and depending on the individual’s circumstances, some lenders that may consider applications from people with past IVAs include:
Precise Mortgages: Known for considering borrowers with a variety of credit issues, including IVAs.
Pepper Money: Offers a range of specialist residential and buy-to-let mortgages for those who have experienced credit problems.
Kensington Mortgages: Provides mortgages for people with complex finances, including IVAs, though they typically require the IVA to have been satisfied for a certain period.
Aldermore: Considers applicants with IVAs, but the IVA must have been satisfied and clear for at least three years.
Together Money: Offers a range of mortgages for individuals who don’t fit standard lending criteria, including those with past IVAs.
The Mortgage Lender: May consider applications from individuals with an IVA, depending on how long ago it was satisfied.
Vida Homeloans: Offers a range of specialist mortgage products, including for those with previous adverse credit events like IVAs.
Please note that these lenders’ policies can change, and the specifics of their criteria can vary. It’s always worth speaking to a mortgage broker with experience in adverse credit situations, who can guide you to the most suitable lenders based on your circumstances.
In the UK, lenders view Individual Voluntary Arrangements (IVAs) as a significant credit issue. An IVA is an indication that the borrower has had difficulty repaying their debts in the past, which can make them a higher risk from a lender’s perspective.
Lenders use credit reports to assess the risk associated with lending to an individual. An IVA will remain on a person’s credit report for six years from the date it was set up, even if it’s completed earlier. This means that for a period of time, after the IVA is finished, it can still impact the person’s ability to secure a mortgage.
However, it’s not impossible to get a mortgage after an IVA, and how the IVA is viewed can depend on various factors:
The Length of Time Since the IVA Was Completed: The more time has passed since the IVA was satisfied, the less impact it generally has on a mortgage application. Some lenders may consider an application as soon as an IVA is completed, while others may require several years to pass.
The Applicant’s Credit Behaviour Since the IVA: If a person can demonstrate that they’ve managed their finances well since the completion of their IVA, such as by not missing any repayments and not taking on excessive debt, lenders may be more likely to consider their application.
The Size of the Deposit: Those with a history of an IVA are often required to put down a larger deposit when applying for a mortgage, which can offset some of the lender’s risk.
The Specific Lender: Different lenders have different policies and risk appetites. Some high street banks may be reluctant to lend to someone who’s had an IVA, but there are specialist lenders who consider applicants with IVAs.
Obtaining a mortgage while having an active Individual Voluntary Arrangement (IVA) is typically quite difficult in the UK but not always impossible. Lenders view an IVA as a serious credit issue, indicating financial difficulty in the past. As a result, most traditional lenders would likely reject an application with an active IVA.
However, there are specialist lenders who work with individuals with poor credit histories, including active IVAs. Here are some potential requirements and factors these lenders may consider:
IVA Conduct: The terms of your IVA must be adhered to strictly. Any missed payments can be seen negatively.
Insolvency Practitioner Permission: Since an IVA is a legally binding agreement to repay your debts, any new borrowing would generally need to be agreed upon with your insolvency practitioner.
Deposit Size: A substantial deposit would likely be required, potentially around 25-30% of the property’s value or even more.
Affordability: Regardless of your IVA, you would need to demonstrate that you can afford the mortgage repayments, taking into account your current income and outgoings.
Employment Status: Stable employment and a reliable income could help to offset some of the risks associated with lending to someone with an IVA.
Credit Conduct Since the IVA: Any evidence of good credit behaviour since the start of the IVA could work in your favour.
Yes, you can apply for a mortgage with a different lender if your Individual Voluntary Arrangement (IVA) is with your current lender. However, getting a mortgage while you have an active IVA, regardless of the lender, can be challenging.
Here’s why:
Applying for a mortgage after or during an Individual Voluntary Arrangement (IVA) in the UK will likely require a variety of documents that prove your identity, income, expenditure, and the status of your IVA. Here are some key documents that you may need:
An Individual Voluntary Arrangement (IVA) generally has a significant impact on mortgage interest rates in the UK, typically resulting in higher rates. Here’s why:
Perceived Risk: Lenders consider an IVA as a major credit issue indicating a history of debt repayment problems. This increases the perceived risk of lending to the individual, and to offset this risk, lenders generally offer mortgages at a higher interest rate.
Limited Lender Options: While mainstream lenders might be unwilling to provide a mortgage to someone with an active IVA or a recent IVA on their credit record, some specialist lenders cater to people with adverse credit histories. However, these lenders typically charge higher interest rates than conventional lenders due to the increased risk involved.
Higher Loan to Value (LTV): After an IVA, you’ll likely be required to put down a larger deposit for a mortgage, which leads to a lower LTV ratio. However, if your deposit is smaller and your LTV ratio is higher, the lender might charge a higher interest rate due to the increased risk.
As time passes and if you can demonstrate responsible credit behaviour post-IVA, your credit score can improve, potentially leading to lower interest rates in the future. Additionally, using a mortgage broker experienced in adverse credit situations can help you find the best possible terms, given your circumstances. Keep in mind that while the interest rate is an important factor, it’s also crucial to consider other aspects of the mortgage, such as fees, the term of the loan, and whether the rate is fixed or variable.
The timeframe for obtaining a mortgage after an Individual Voluntary Arrangement (IVA) can vary based on several factors, including the specific lender’s policies and your personal financial situation. However, here’s a general guide:
Immediately After Completion: Some specialist lenders might consider a mortgage application immediately after the IVA has been completed. However, it’s likely that the terms will be less favourable, with a requirement for a high deposit (often around 25-30% or more) and higher interest rates due to the perceived risk.
1-3 Years After Completion: More options start to become available 1-3 years after the completion of the IVA, especially if you’ve been able to improve your credit score during this time. The deposit required might also decrease slightly.
4-6 Years After Completion: Once the IVA has dropped off your credit report (which occurs six years from the start of the IVA), you may find that even more lenders are willing to consider your application, and you may be able to access more competitive rates.
6+ Years After Completion: After six years, the IVA should no longer be on your credit report (assuming there were no extensions), and if you’ve managed your credit well during this time, you should have more options available, potentially even with high street lenders.
Keep in mind that this is a general guide, and the specifics can vary greatly depending on the lender and your individual circumstances. It can often be beneficial to work with a mortgage broker who has experience with adverse credit situations, as they can provide you with advice tailored to your situation and help you find the most suitable lenders.
Yes, an Individual Voluntary Arrangement (IVA) can significantly impact your ability to get a mortgage. It’s considered a serious credit issue and will be recorded on your credit report, which potential lenders will review when considering your mortgage application. Here’s how an IVA can affect your mortgage prospects:
Fewer Lenders: Many lenders, particularly mainstream ones, may be reluctant to offer a mortgage to someone with an active IVA or an IVA in their recent credit history. This can limit your options to specialist lenders who offer mortgages to individuals with poor credit history.
Higher Interest Rates: Due to the perceived risk of lending to someone with an IVA, lenders typically charge higher interest rates.
Larger deposit Required: Lenders usually require a larger deposit from borrowers with an IVA. The Loan to Value ratio (the amount of the loan compared to the value of the property) will typically be lower, meaning you might need a deposit of 25-30% or more.
Affordability Assessment: Mortgage providers assess your ability to repay the loan. An active IVA may reduce your disposable income, affecting this assessment.
Credit Score Impact: An IVA will stay on your credit report for six years from the date it was set up. This can lower your credit score and impact your ability to secure a mortgage even after the IVA is completed.
Approval from your Insolvency Practitioner: If you’re currently in an IVA and wish to get a mortgage, you’ll likely need to get approval from your insolvency practitioner.
When you enter into an IVA, it becomes a part of your credit history and can significantly impact your credit score, indicating to potential lenders that you’ve had difficulties managing your debts in the past.
An Individual Voluntary Arrangement (IVA) can significantly impact your credit rating. Here’s how:
Negative Mark on Credit Report: An IVA is a form of insolvency, and it’s considered a significant negative event on your credit report. This can make it more difficult to obtain credit during the IVA period and for some time afterwards.
Duration on Credit File: An IVA stays on your credit file for six years from the start date, even if you complete the IVA in less time.
Lower Credit Score: An IVA can considerably lower your credit score. The exact impact can vary depending on various factors, such as the scoring model being used and your credit history prior to the IVA.
Notice of Correction: You may add a “notice of correction” to your credit file to explain why you entered into an IVA. However, while this might help provide context to future creditors, it doesn’t remove the IVA from your credit report or increase your credit score.
Impact on Future Credit Applications: During the IVA period and for a time after, you may find it more challenging to get approved for credit, and if you do, it’s likely to be at higher interest rates due to the perceived risk associated with your credit history.
Difficulty in Repairing Credit: It can be more challenging to improve your credit score during an IVA, as taking on new credit (which can potentially help rebuild your score if managed well) may be restricted under the terms of your agreement.
While an IVA can negatively impact your credit rating, it’s important to remember that the purpose of an IVA is to help manage and eventually clear your debt. Once the IVA is completed and drops off your credit report, it’s possible to rebuild your credit score by demonstrating responsible credit behaviour. You might want to consider seeking advice from a financial counsellor to understand the best strategies for improving your credit rating post-IVA.
An Individual Voluntary Arrangement (IVA) typically stays on your credit file for six years from the date it was set up, regardless of when it was completed. During this period, the IVA will be visible to any potential lenders who check your credit report.
This means that if you successfully complete your IVA in five years (which is the standard term), it will still remain on your credit report for an additional year. If your IVA lasts longer than six years, for whatever reason, it will remain on your credit file until a year after it finishes.
Once this six-year period is up, the IVA should automatically be removed from your credit report. After the IVA has been removed, and assuming no other adverse information is recorded, your credit file will start to improve, provided you manage any new credit responsibly. It’s always a good idea to check your credit report regularly to ensure the information recorded is accurate and up-to-date.
When you apply for a mortgage, lenders will typically carry out a thorough credit check, which includes reviewing any public records related to your financial history. An Individual Voluntary Arrangement (IVA) is recorded on your credit file, so the lender will be able to see it during this check.
Furthermore, during the mortgage application process, you’ll usually be asked about your credit history, which includes any IVAs. Honesty is crucial in these situations. If you fail to declare your IVA and the lender discovers it, it could be viewed as an attempt to mislead them, which could lead to your mortgage application being declined.
Even if your IVA has been completed and it’s no longer on your credit file, some mortgage applications specifically ask if you’ve ever been declared insolvent, which would include an IVA. In these cases, you should declare your past IVA, even if it no longer appears on your credit file.
Deciding whether an Individual Voluntary Arrangement (IVA) is right for you depends on your personal financial situation and your ability to meet the terms of an IVA. It’s a legal agreement between you and your creditors where you agree to pay back a portion of your debts over a set period, typically five to six years.
Here are a few considerations to help you determine if an IVA might be suitable:
Unmanageable Debt Level: IVAs are typically suitable for individuals who have a high level of unsecured debt that they’re struggling to manage. This might include credit cards, personal loans, or overdue bills.
Regular Income: To qualify for an IVA, you need to have a regular income that allows you to make the agreed monthly repayments to your creditors. This payment is typically calculated based on what you can reasonably afford after essential expenses.
Asset Protection: If you own your home or have other significant assets, an IVA may help protect these from creditors, as it prevents them from taking further action to recover the debt. However, in some cases, you might be required to release equity from your home as part of the IVA.
Debt Write-off: At the end of the IVA term, any remaining debt included in the IVA is written off.
However, there are also significant downsides to consider:
Credit Score Impact: An IVA will have a severe negative impact on your credit score and will remain on your credit file for six years, making it difficult to obtain credit during this period.
Long-term Commitment: An IVA typically lasts for five to six years, and you’ll need to stick to the agreed payments throughout this period.
Living on a Budget: You’ll need to follow a strict budget during the IVA period, as you’ll have to commit most of your disposable income towards the IVA payments.
Public Record: An IVA is a matter of public record, and it will appear on the Insolvency Register.
Potential for Failure: If you fail to keep up with the IVA payments, the arrangement could fail, and you could be made bankrupt.
Obtaining a mortgage through government schemes like Help to Buy or Shared Ownership with an active Individual Voluntary Arrangement (IVA) or shortly after completing one can be challenging.
These schemes involve getting a mortgage from a lender, and that lender will conduct a thorough credit check as part of their application process. An IVA is considered a significant adverse credit event, so it can make it more difficult to get approved for a mortgage, even under these schemes.
For the Help to Buy scheme, you’ll likely find it challenging to get approval if you’re in an active IVA or have recently completed one. Lenders associated with the scheme will generally require a good credit history, which an IVA can impact.
For Shared Ownership, the situation can be similar. While the scheme can be more accessible than traditional mortgage routes, an IVA can still pose a barrier. Each housing association might have its own policy regarding applicants with an IVA.
The specific criteria can vary greatly depending on the lender, housing association, and individual circumstances, so it’s always best to check directly with the relevant parties. Once the IVA has been completed and a reasonable period has passed, more options may open up, particularly if you’ve managed to rebuild your credit score.
Remember, it’s crucial to be honest about your financial history when applying for these schemes. If you’re unsure of your options, speaking to a financial advisor or mortgage broker who has experience with adverse credit situations could be beneficial. They can provide advice tailored to your situation and help you navigate the application process.
Whether you will need to remortgage or sell your home during an Individual Voluntary Arrangement (IVA) depends on your specific circumstances and the terms of your IVA.
An IVA is a legally binding agreement between you and your creditors, and the terms are tailored to your individual financial situation. It’s designed to allow you to repay a portion of your debts over a set period (typically five to six years) while protecting your essential assets, including your home.
Remortgaging: In the final year of your IVA, you may be expected to attempt to remortgage your property to release equity, which can then be used to repay more of your debts. However, there are safeguards in place to ensure this is affordable and does not extend your mortgage beyond its original term or into your retirement. If remortgaging is not possible or affordable, the IVA may be extended for an additional 12 months instead.
Selling Your Home: It’s generally unlikely that you will need to sell your home as part of your IVA. In most cases, your home will be protected as long as you keep up with your mortgage payments and IVA obligations. However, in some situations, selling your home may be a consideration – for example, if you have significant equity and you voluntarily decide to sell your home to settle your debts.
If you can’t remortgage, whether due to an adverse credit history, issues with affordability, or other factors, there are several options you might consider:
Improve Your Credit Score: If a poor credit score is the primary barrier to remortgaging, you could work on improving it. This process may include repaying outstanding debts, making all future payments on time, and correcting any errors on your credit report. Keep in mind that improving your credit score can take time.
Pay Off Existing Mortgage: If you’re close to paying off your existing mortgage and you can afford to make larger payments, you might consider doing so to become mortgage-free sooner.
Seek Specialist Advice: Speak to a mortgage broker, particularly one who specialises in adverse credit cases. They can help you understand your options and potentially find a lender who may be willing to offer you a remortgage.
Rent Out Your Property: If it’s an option for you, consider renting out your property to cover the mortgage payments.
Sell Your Property: If you’re unable to remortgage and are struggling with repayments, you might consider selling your property. You could then use the proceeds to pay off your existing mortgage. However, this is a significant decision and should only be made after careful consideration and consultation with a financial advisor.
Seek Debt Advice: If you’re considering remortgaging to consolidate debts and you’re unable to do so, consider seeking advice from a debt advice charity or professional. They can help you explore other options for managing your debt.
While it is technically possible to obtain a credit card while in an Individual Voluntary Arrangement (IVA), it’s usually not recommended or allowed under the terms of the IVA without the permission of your insolvency practitioner.
Here are a few points to consider:
Terms of the IVA: Most IVAs include a clause that prevents you from obtaining more credit during the term of the IVA without the express permission of your insolvency practitioner. This is to prevent further debt accumulation and ensure that you’re focusing on repaying the existing debts included in the IVA.
Credit Rating Impact: An IVA will significantly impact your credit rating, which can make it difficult to get approved for a credit card. If you are approved, it’s likely to be at a much higher interest rate due to the perceived risk associated with your credit history.
Specialist Credit Cards: Some lenders offer credit cards designed for individuals with poor credit. However, these typically come with high-interest rates, and the credit limit is usually quite low.
Debt Management: If you find that you’re struggling with your finances during the term of the IVA, it’s crucial to talk to your insolvency practitioner. They can provide advice and potentially revise the terms of your IVA to make it more manageable.
Yes, you can sell your house after completing an Individual Voluntary Arrangement (IVA). Once your IVA is successfully completed and you’ve received your completion certificate, you are free to sell your house without needing to use the proceeds to pay off your creditors. The debts included in your IVA will have been settled, so they should no longer be a barrier.
However, an IVA remains on your credit file for six years from the date it started, so if you plan to purchase another property after selling your current one, you may find it more challenging to secure a mortgage while the IVA is still on your record. Each lender will have its own policies when it comes to lending to someone with a past IVA, so it’s worth speaking to a mortgage broker or financial adviser for tailored advice.
Always make sure you fully understand the terms of your IVA and confirm with your insolvency practitioner before making any major financial decisions, such as selling your home.
An Individual Voluntary Arrangement (IVA) is likely to significantly impact your ability to get a buy-to-let mortgage, both during the term of the IVA and for some time after it’s completed.
Here’s why:
As mentioned earlier, an IVA will have a severe negative impact on your credit rating. It remains on your credit file for six years from the date it started, making it difficult to secure any form of credit, including a mortgage, during this time.
Many mainstream lenders view an IVA as a significant adverse credit event. They may be reluctant to approve a mortgage application from someone with an active IVA or a recent history of one. Some specialist lenders might consider lending to someone with a past IVA, but they are likely to offer less favourable terms, such as requiring a larger deposit or charging a higher interest rate.
If you’re currently in an IVA, you’re typically not allowed to take on additional credit of £500 or more without the permission of your insolvency practitioner. This includes applying for a mortgage.
Despite these challenges, it may still be possible to secure a buy-to-let mortgage after an IVA, particularly once it has been completed and some time has passed. The specific criteria can vary greatly depending on the lender and your individual circumstances.
Yes, securing a fixed-rate mortgage with an active Individual Voluntary Arrangement (IVA) or even after completing one can be more difficult. Many lenders, especially mainstream ones, may be hesitant to approve mortgage applications from someone with an active IVA or a recent history of one. This is due to the increased perceived risk of lending to someone who has previously had difficulty repaying their debts.
Even if you are able to secure a mortgage with an IVA, the terms may not be as favourable as those offered to individuals with good credit. This might mean higher interest rates, a requirement for a larger deposit, or additional fees.
Both an Individual Voluntary Arrangement (IVA) and bankruptcy are forms of insolvency, and both can have a significant negative impact on your ability to secure a mortgage in the future.
Here are some considerations:
Duration of Impact: Both an IVA and bankruptcy stay on your credit report for six years from the date they start, which can make it difficult to secure a mortgage during this time. However, while an IVA typically lasts for five to six years before you’re discharged, bankruptcy is usually discharged after one year. Even so, you will still need to declare it to potential lenders for several years afterwards, and many will ask if you’ve ever been bankrupt.
Future Lending Policies: Many lenders view both IVAs and bankruptcy as serious adverse credit events, which can lead to the refusal of your mortgage application or an offer with higher interest rates and a requirement for a larger deposit. While there are lenders who specialise in offering mortgages to those with adverse credit histories, their terms may be less favourable than those offered by mainstream lenders.
Home Ownership: An IVA is a formal agreement to repay creditors as much as you can afford over a set period, and it’s often possible to keep your home during an IVA, assuming you keep up with mortgage payments. In bankruptcy, however, your assets (including your home) can be sold to repay creditors, particularly if there’s significant equity in your home.
Stigma and Perception: There can be a greater stigma associated with bankruptcy compared to an IVA, and this can influence lender perceptions and policies, although this varies from lender to lender.
An Individual Voluntary Arrangement (IVA) can have an impact on a joint application for credit, such as a mortgage. Here’s how:
Credit Check: When you apply for a joint credit product like a mortgage, the lender will typically run a credit check on both applicants. If one person has an adverse credit history due to an IVA, this can negatively affect the overall creditworthiness of the joint application, making it more difficult to secure approval.
Linked Credit Files: When you apply for a joint product, your credit files become ‘financially linked’. This means that the IVA on one person’s credit file can indirectly impact the other person’s credit rating. Future lenders can see this association and may take it into account when making lending decisions.
Affordability Assessment: When assessing a mortgage application, lenders will look at the income and expenditure of both applicants. If one applicant is in an IVA, they will have a considerable portion of their income committed to repaying debts, which could affect the affordability assessment.
Lender Policies: Each lender has different policies and criteria for handling joint applications where one person has an IVA. Some might accept the application but offer less favourable terms, such as a higher interest rate or requirement for a larger deposit. Others might refuse the application outright.
Yes, you can apply for a joint mortgage if your partner has an Individual Voluntary Arrangement (IVA), but it’s important to know that it may be more challenging to secure approval. This is because an IVA is a form of insolvency that’s recorded on your partner’s credit file, indicating to lenders that they’ve had trouble managing their debts in the past.
Here are a few things to consider:
If you are in an Individual Voluntary Arrangement (IVA) and need support, there are a few places you can turn to:
Your Insolvency Practitioner: Your insolvency practitioner (IP) is your main point of contact for any questions or concerns about your IVA. They can provide advice and support and can discuss your options if your circumstances change or if you’re struggling to meet your repayments.
Debt Advice Organisations: Several organisations in the UK offer free, confidential advice on debt, including IVAs. These include:
IVA Forums and Online Communities: Online forums like the IVA.co.uk forum can be a great source of support and information from others who are in or have been in similar situations.
Financial Adviser: If you’re looking for advice on other financial matters, such as future mortgage applications, a financial adviser could be beneficial. Make sure to choose an adviser with experience in adverse credit situations.
Improving your chances of getting a mortgage after completing an Individual Voluntary Arrangement (IVA) in the UK involves several steps:
Rebuild Your Credit Score: The first and most important step is to rebuild your credit score. An IVA stays on your credit file for six years from the date it starts and can have a significant impact on your ability to secure credit. To rebuild your credit score:
Pay all your bills on time: This includes utility bills, credit cards, and any other forms of credit.
Use a credit builder card: These are credit cards specifically designed for people with poor credit history. They have lower limits and higher interest rates, but using one responsibly can help rebuild your credit over time.
Register on the electoral roll: This can improve your credit score and is often used by lenders as a way to verify your identity.
Keep your credit utilisation low: Try to use less than 30% of your available credit limit.
Check your credit report regularly: Make sure all the information is correct and up-to-date. Report any inaccuracies to the credit reference agency.
Save for a Larger Deposit: Having a larger deposit can improve your chances of securing a mortgage after an IVA. It reduces the lender’s risk and may make them more willing to approve your application.
Demonstrate Stable Income: Lenders want to see that you have a steady, reliable income. If you can show that you’ve been in stable employment for a significant period, this can work in your favour.
Limit Your Borrowing: Try not to apply for too much credit in the period leading up to your mortgage application. Too many credit applications can look like you’re overly reliant on credit.
Consult a Specialist Mortgage Broker: A mortgage broker who specialises in adverse credit situations can provide tailored advice and help you find lenders more likely to approve your application.
The First Homes scheme, which the UK government launched to help first-time buyers and key workers buy a home, doesn’t explicitly disqualify people who have completed an Individual Voluntary Arrangement (IVA).
However, securing a mortgage, which is typically required to buy a home through the scheme, could be more challenging if you have completed an IVA. This is because an IVA is a form of insolvency and is recorded on your credit file for six years from the date it starts. Lenders may view this as a sign that you’ve had difficulty managing your debts in the past, which could impact their decision on whether to approve your mortgage application.
If you’re considering buying a home through the First Homes scheme and you’ve completed an IVA, it could be beneficial to seek advice from a mortgage broker or financial advisor who has experience in adverse credit situations. They can provide advice tailored to your situation and help you find lenders who may be more open to your application.
The maximum loan-to-value (LTV) ratio you can get on a mortgage after an Individual Voluntary Arrangement (IVA) in the UK can vary significantly depending on a range of factors.
You might find that many lenders who cater to those with an adverse credit history, such as having an IVA, may offer a maximum LTV of around 60-75%. However, some specialist lenders might offer higher LTV ratios, but this usually comes with higher interest rates and more stringent affordability checks.
Your credit score: If you’ve been able to rebuild your credit score after completing your IVA, you might be able to access better mortgage deals.
The amount of time that has passed since your IVA was completed: Lenders may be more willing to offer a higher LTV if a significant amount of time has passed since your IVA was discharged.
Your deposit: A larger deposit generally allows you to access better mortgage deals.
Your income and affordability: Lenders will consider your income and outgoings to make sure you can afford the mortgage repayments.
The lender’s own criteria and policies: Each lender has different criteria and policies when it comes to assessing risk and offering mortgages to people with a history of an IVA.
There isn’t typically a specific minimum income requirement to get a mortgage after an Individual Voluntary Arrangement (IVA) in the UK that applies universally across all lenders.
However, your income is a significant factor in any mortgage application, as lenders want to be confident you can afford the repayments on your loan.
Lenders will assess your income against your outgoings to determine whether you can afford the monthly mortgage repayments. They’ll consider your regular bills, living expenses, and any other financial commitments you have.
While income is an essential factor, lenders will also consider other aspects of your financial situation and the specifics of the property you’re hoping to purchase.
Improving your credit score after completing an Individual Voluntary Arrangement (IVA) in the UK requires careful financial management and patience, as it takes time to rebuild your credit. Here are some steps to help you:
Check Your Credit Report: Regularly review your credit report to ensure all the information is accurate. Make sure that your IVA is marked as satisfied if it’s been completed. If you find any errors, contact the credit reference agency to correct them.
Pay Bills on Time: Ensure you pay all of your bills (including utility bills) on time. This shows future lenders that you’re responsible with repayments.
Use a Credit Builder Card: These cards usually have a low limit and high-interest rate, but using one can help to rebuild your credit score. It’s important to pay off the full balance each month to avoid paying interest.
Stay Within Credit Limits: Try to use less than 30% of your available credit limit. This shows that you can manage your credit responsibly.
Register on the Electoral Roll: This can improve your credit score, as it provides proof of address and stability, which lenders favour.
Limit Credit Applications: Too many credit applications can look like you’re reliant on credit, which can put lenders off. Spread out your credit applications and only apply for credit you’re confident you’ll get.
Build a Savings Habit: Although this doesn’t directly affect your credit score, having savings can improve your overall financial health and may make lenders more confident about your ability to repay.
Be Patient: Rebuilding credit takes time. Keep good financial habits, even if you don’t see immediate improvements in your credit score.
Whether or not you can get a mortgage with an Individual Voluntary Arrangement (IVA) if you have a guarantor largely depends on the lending policies of the specific lender. Some lenders may consider a guarantor mortgage application for someone with an IVA, but the criteria are often more stringent, and the range of available lenders will be narrower.
Guarantor mortgages allow a third party, typically a family member or close friend, to guarantee the mortgage repayments. The guarantor is legally bound to make the repayments if the borrower fails to do so. This can offer some security to the lender, but it doesn’t remove the risks associated with lending to someone with an adverse credit history like an IVA.
Keep in mind that applying for a guarantor mortgage is a significant commitment for both the borrower and the guarantor, so it’s crucial to understand all the implications. The guarantor needs to be in a solid financial position and must be aware that their credit could be affected if repayments aren’t met.
Moreover, many lenders prefer guarantors to be homeowners themselves, as this provides additional security. Some may also require the guarantor to take legal advice before the agreement is finalised to ensure they understand their obligations.
Yes, it is possible to get a self-employed mortgage in the UK after an Individual Voluntary Arrangement (IVA), but it might be more challenging. This is because lenders often view IVAs as a sign of past financial difficulty, and self-employed individuals can be seen as having less stable income compared to those in regular employment.
As a self-employed person, you will need to provide proof of your income, which is typically in the form of two to three years’ worth of accounts or tax returns. Some lenders may accept less, particularly if you have a rising income trend or your business hasn’t been affected by unusual circumstances.
There are lenders who specialise in providing mortgages for those with adverse credit histories and for self-employed individuals. They are more likely to understand your situation and offer solutions that mainstream lenders may not.
A mortgage broker or financial adviser who has experience with self-employed clients and adverse credit situations can provide invaluable advice. They can help you understand your options, prepare for the application, and find suitable lenders.
Negotiating better mortgage terms can be challenging if you’ve had an Individual Voluntary Arrangement (IVA) in the past. This is because an IVA is seen as a sign of financial difficulty, and lenders might consider you as a higher risk. However, this doesn’t mean it’s impossible to secure a more favourable mortgage deal.
Lenders look for stability when assessing risk. If you have a stable job and a steady income, this can work in your favour.
The higher your credit score, the better the mortgage terms you’re likely to be offered. Pay all bills on time, reduce your overall level of debt, and avoid applying for new credit in the lead-up to your mortgage application to help improve your score.
Yes, there are specialist advisors in the UK who can assist you with securing a mortgage after an Individual Voluntary Arrangement (IVA). These specialists have experience working with clients who have adverse credit histories and understand the intricacies of applying for a mortgage under these circumstances. They can also help you understand your options and navigate the complexities of the mortgage market.
They can help identify lenders who are more likely to approve your mortgage application, even with an IVA in your past. These may include both mainstream lenders and specialist adverse credit lenders.
UK mortgage brokers typically offer several pieces of advice to individuals who have had an Individual Voluntary Arrangement (IVA) in the past. One of the key pieces of advice is to rebuild your credit score. This can be achieved by ensuring all your existing financial commitments are paid on time, limiting your use of credit, and regularly checking your credit report to ensure all information is correct.
Brokers often recommend looking at specialist lenders. While mainstream banks and building societies might be reluctant to lend to someone who has had an IVA, there are specialist lenders who specifically cater to those with adverse credit histories.
A mortgage broker can guide you through the process, provide advice tailored to your situation, and help you find suitable lenders. They can also help with the application process and negotiate on your behalf.
An Individual Voluntary Arrangement (IVA) can have a significant impact on your ability to refinance (also known as remortgaging) your mortgage in the UK. If you’re able to refinance your mortgage with an IVA on your record, you may find that the interest rates offered are higher than average. This is because lenders see you as a higher risk and therefore charge more interest to offset this risk.
Even after the completion of your IVA, lenders will still perform thorough affordability checks when considering your application for refinancing. They will look at your income, outgoings, and whether you would be able to afford the mortgage payments, considering various factors, including potential future interest rate rises.
Yes, it’s possible to get a Right to Buy mortgage after completing an Individual Voluntary Arrangement (IVA), but it will be more challenging, and there will be fewer lenders willing to offer a mortgage under these circumstances.
Lenders will conduct an affordability assessment to ensure that you can comfortably afford the mortgage repayments. This will involve looking at your income and outgoings.
You may need to approach specialist lenders who are willing to consider applicants with a past IVA. These lenders often offer products specifically designed for people with adverse credit histories.
Securing a commercial mortgage in the UK after having an Individual Voluntary Arrangement (IVA) can be challenging, but it’s not impossible. Different lenders have different policies.
Mainstream lenders might be reluctant to offer a commercial mortgage to someone who has had an IVA. Specialist lenders, however, often have more flexible criteria and may consider your application, albeit likely at higher interest rates.
For commercial mortgages, lenders also consider the financial health of the business. A strong business plan, steady income, and profitability can all make a difference in the lender’s decision.
Yes, you can apply for a mortgage if you’ve had more than one Individual Voluntary Arrangement (IVA), but it will be more challenging to secure a mortgage under these circumstances.
Having more than one IVA will have a significant impact on your credit score. Each IVA will be recorded on your credit report for six years from the date it was approved, even if it was completed in less time. This can make it difficult to secure a mortgage as lenders may see you as high risk.
The total amount of your IVA debt can significantly impact your chances of securing a mortgage in several ways:
Lenders often look at your debt-to-income ratio, which is the amount of your income that goes towards debt repayment. A high amount of IVA debt might mean a high debt-to-income ratio, which could make you appear riskier to lenders.
The amount of your debt, including an IVA, influences your credit rating. A larger IVA debt may have a more significant negative impact on your credit score compared to a smaller one. This can make it more challenging to secure a mortgage as lenders may view you as a higher risk.
If you have a significant amount of IVA debt, lenders may require a larger deposit to mitigate their risk. This could make it more difficult to secure a mortgage if you don’t have substantial savings.
Higher debt levels may also affect the interest rates offered to you. Lenders may charge higher interest rates to borrowers with more significant IVA debt due to the increased risk associated with lending to them.
An Individual Voluntary Arrangement (IVA) could impact your ability to secure a mortgage for a property renovation project, just as it could affect any type of mortgage application. Here are some specific ways in which an IVA could impact your prospects:
An IVA indicates that you’ve had difficulties managing debt in the past, which can make you appear as a high-risk borrower to potential lenders. Many mainstream lenders may be hesitant to approve a mortgage under these circumstances.
Some lenders might not consider your application at all if you’ve had an IVA. You may have to seek out specialist lenders who cater to individuals with adverse credit histories.
Lenders will conduct a thorough affordability assessment. If you’re still making payments towards an IVA, these will be considered in any affordability calculations.
It’s important to note that the majority of mainstream UK lenders will consider an Individual Voluntary Agreement (IVA) when assessing a mortgage application due to the risk it represents. An IVA suggests that an applicant has had previous difficulties managing their debts, which might make them a higher-risk borrower.
However, there are specialist lenders who work specifically with people who have adverse credit histories, including those with an IVA. These lenders have a more flexible approach and assess applications on a case-by-case basis. While they don’t disregard an IVA, they may still be willing to consider an application despite one.
Interest rates and deposit requirements with these lenders can be higher due to the perceived risk associated with lending to someone with an adverse credit history.
An Individual Voluntary Arrangement (IVA) can potentially affect your ability to transfer to a new mortgage product with your existing or a new lender, often referred to as a product transfer or remortgaging.
Some lenders might not consider your application for a product transfer if you have an active IVA or if your IVA was completed recently. You may have fewer options and may have to remain with your current product or lender until your credit health improves.
Even if a product transfer is possible, the new mortgage product might come with higher interest rates due to the increased perceived risk associated with an IVA.
If you have an Individual Voluntary Arrangement (IVA), obtaining a mortgage can be more complex. Here are some pieces of advice to consider:
Repair Your Credit: Start rebuilding your credit score as soon as possible. You can do this by making sure all your bills and debt repayments are made on time. This shows potential lenders that you’re responsible with your finances.
Save for a Larger Deposit: Due to the increased perceived risk, lenders may require a larger deposit if you have an IVA. Saving more can help increase the range of mortgage products available to you.
Be Honest About Your IVA: When applying for a mortgage, always be honest about your IVA. It will be visible on your credit report, and providing false information could lead to your application being rejected.
Consider Specialist Lenders: Mainstream lenders may be less willing to provide a mortgage to someone with an IVA. Specialist lenders cater to those with adverse credit histories and might be more likely to consider your application.
Seek Professional Advice: Contact a mortgage broker or advisor who has experience with adverse credit situations. They can guide you to suitable lenders and help you prepare an application that demonstrates your ability to manage mortgage repayments despite the IVA.
Wait if You Can: The impact of an IVA on your credit file decreases over time. If you can wait until the IVA is completed and some time has passed, you may have access to a wider range of mortgage products with better rates.
Please note that everyone’s situation is unique, and it’s always advisable to seek personalised advice from a financial advisor or mortgage broker. They can take into account your personal circumstances and help you understand your options.
Yes, you will usually need to declare any previous IVAs when applying for a mortgage. This is because it forms part of your credit history, which lenders will check to assess your creditworthiness.
This is called remortgaging, and it may be possible, but it would depend on your individual circumstances, including your equity, income, and the lender’s terms and conditions.
Yes, there are some specialist lenders who may consider offering mortgages to people with adverse credit histories, including IVAs. It’s recommended to seek advice from a mortgage advisor to explore your options.
Yes, there are other debt solutions, such as Debt Management Plans (DMP), Debt Relief Orders (DRO), or bankruptcy, each of which can have different impacts on your ability to secure a mortgage.
While you may be able to apply, non-UK lenders will still likely conduct a credit check, and an IVA may affect their decision. It’s also important to consider the implications of borrowing from an overseas lender.
Having an IVA can lead to higher interest rates on your mortgage. This is because lenders may see you as a higher risk and therefore charge a higher interest rate to offset this risk.
Yes, you can apply, but an IVA, regardless of its origin, can impact your credit history and therefore affect your mortgage application.
Yes, if one partner has an IVA, it can affect a joint mortgage application. Lenders will usually check the credit history of both applicants when deciding whether to approve a mortgage.
We are a hybrid mortgage broker and protection adviser. However, we want to make it clear that we do not have physical branch offices everywhere in the UK. You can get our services over the phone, online, and face-to-face in some circumstances.
Please keep in mind that while we may not be local to you, we may still assist you. Imagine if you had a long-term health issue that needed to be addressed. Would you rather have the person who is closest to you or the person who is the best? Now is the moment to put that critical thinking to work in your search.
Legal
Count Ready Limited is registered in England and Wales, No: 10283205. Registered Address: Unit 10, Robjohns House, Navigation Road, Chelmsford, England, CM2 6ND.
Count Ready Limited is an Appointed Representative of Connect IFA Limited 441505 which is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/s/) under reference: 976111.
The FCA do not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies.
The information contained within this website is subject on the UK regulatory regime and is therefore targeted at consumers based in the UK.
We usually charge fees of £595 on offer, but we will agree to our fees with you before we undertake any chargeable work. We will also be paid by commission from the lender.
Commission disclosure: We are a credit broker and not a lender. We have access to an extensive range of lenders. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive commission from them after completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and product. The lenders we work with pay commission at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
Disclaimer: All content on the Count Ready website can only ever provide general information and does not constitute financial advice. For this reason, we always recommend that you speak to authorised advisers for your needs. (Please be aware that by clicking onto any outbound links you are leaving the www.countready.co.uk. Please note that neither Count Ready or Connect IFA are responsible for the accuracy of the information contained within the linked site(s) accessible from this website.)
© Count Ready – 2024. All rights reserved.
