What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is basically a formal agreement you can make with your creditors to get your finances back on track. It’s set up by an insolvency practitioner (IP) and allows you to repay your debts in manageable monthly payments. Once it’s all sorted, your creditors have to stick to the terms, giving you some breathing room.
Here’s the deal with an IVA:
- It’s legally binding: Once you’re in, creditors can’t chase you for money.
- Repayments are fixed: Your payments are based on what you can afford.
- Debt write-off: At the end of the term, any leftover eligible debt is wiped out.
How Does an IVA Affect Your Chances of Getting a Mortgage?
Let’s be honest: an IVA does make things tricky when it comes to getting a mortgage. Here’s how it hits you:
- It shows on your credit report: It sticks around for six years and makes lenders nervous.
- Your credit score takes a hit: Lenders see this and might think twice.
- It’s a red flag for lenders: They’ll assume you’ve had financial struggles, which makes them cautious.
Can You Get a Mortgage While You Have an IVA?
What Happens if You Apply During an Active IVA?
If your IVA is still ongoing, getting a mortgage is tough. Most lenders will want your insolvency practitioner to sign off on it, and your options will likely be limited to specialist lenders.
How Does Completing an IVA Help?
Once your IVA is done and dusted, things get a bit easier. Lenders are more likely to look at your application if you’ve shown you can manage your finances.
Which Lenders Will Consider You?
Mainstream lenders might not be too keen, but there are specialist lenders out there who work with people with adverse credit histories, including IVAs.
What Will Lenders Look At?
Lenders will dig into your credit history and current financial situation. They’re not just focused on your credit score—they want to see if you’ve turned things around.
How Much Deposit Will You Need?
Expect to need a larger deposit—anywhere from 15% to 30%. The more you can save, the better your chances of getting approved.
How Can You Improve Your Chances of Getting a Mortgage with an IVA?
Should You Use a Specialist Mortgage Broker?
Yes, 100%. A specialist broker can:
- Find lenders who are open to working with people who have had an IVA.
- Help you put together a solid application.
- Give you advice that’s tailored to your situation.
How Can a Bigger Deposit Help?
A bigger deposit lowers the risk for lenders and makes your application stronger. Here are some tips:
- Cut back on non-essential expenses.
- Set up a savings account for your deposit.
- Look into shared equity or home-buying schemes if they’re available.
What About Rebuilding Your Credit?
It’s a must. Here’s how you can do it:
- Get on the electoral roll.
- Pay all your bills on time.
- Use a credit-builder card wisely to show you can manage credit.
Should You Close Unused Credit Accounts?
Yes. Too many open accounts can make you look risky to lenders. Close anything you’re not using to simplify your financial profile.
How Does Stability Help?
Lenders like to see consistency. A steady job, regular income, and no new debt show you’re in control of your finances.
What Challenges Will You Face When Applying for a Mortgage with an IVA?
How Can You Handle High Deposit Requirements?
Start saving as soon as you can. If you’re struggling to save enough, consider asking family for help or looking into savings boosters.
What If Your Lender Options Are Limited?
This is where a specialist broker is worth their weight in gold. They can connect you with lenders who understand your situation.
How Do You Manage Higher Interest Rates?
Specialist mortgages often come with higher rates. Compare offers from multiple lenders and plan to remortgage later when your credit improves.
How Do You Prepare for Lender Scrutiny?
Lenders will go through your financial history with a fine-tooth comb. Make sure you have:
- Proof that your IVA is completed (if it is).
- Bank statements showing consistent income.
- Evidence of savings for your deposit.
Why Should You Work with a Specialist Mortgage Broker?
A good broker can:
- Explain what options are available to you.
- Introduce you to lenders who work with IVA cases.
- Negotiate better terms on your behalf.
- Help you stay on top of the paperwork.
Can You Remortgage After an IVA?
Absolutely. Once your IVA is off your credit file and your score improves, you’ll likely qualify for better deals. A remortgage can save you money on interest and monthly repayments.
Conclusion: How Can You Get a Mortgage with an IVA?
It’s not easy, but it’s definitely doable. Focus on saving a bigger deposit, rebuilding your credit, and showing lenders you’re financially stable. A specialist mortgage broker can guide you through the process and connect you with lenders who are willing to give you a shot.
Patience is key. The road to getting a mortgage after an IVA might take a bit longer, but with the right approach, you’ll get there.