Getting a mortgage after a debt management plan, Individual Voluntary Arrangement or bankruptcy may be possible, but the options available will depend on your individual circumstances.
Lenders may consider the type of debt solution, whether it is still active, when it was completed and how you have managed your finances since. Your income, affordability, deposit and wider credit history will also form part of the assessment.
This guide explains some of the factors lenders may consider when reviewing a mortgage application following a debt solution.
Can you get a mortgage after a debt solution?
A previous debt solution does not automatically prevent you from obtaining a mortgage. However, it may reduce the number of lenders willing to consider your application, particularly when the arrangement is recent or remains active.
Applications are normally considered individually. Two people who have used the same type of debt solution may receive different outcomes because their income, deposit, recent payment history and overall circumstances are different.
Different types of debt solution
The way a lender assesses your application may depend on the particular debt solution involved.
Debt management plans
A debt management plan, commonly called a DMP, is an arrangement under which reduced payments are made towards qualifying debts.
Some lenders may consider an application while a DMP is active, although the available options are likely to be more limited. They may examine:
- How long the plan has been running
- Whether all agreed payments have been maintained
- The amount of debt still outstanding
- Whether creditors have registered defaults or missed payments
- Whether the proposed mortgage remains affordable alongside the plan
A completed DMP may be viewed more favourably, particularly where your subsequent credit conduct demonstrates greater financial stability.
Individual Voluntary Arrangements
An Individual Voluntary Arrangement, or IVA, is a formal agreement with creditors to repay some or all of the money owed over an agreed period.
Mortgage options may be particularly restricted while an IVA is active. After completion, lenders may consider factors such as:
- When the IVA began and when it was completed
- Whether you received formal confirmation of completion
- Your payment history since completing the arrangement
- Any other adverse information on your credit reports
- Your current income, expenditure and deposit
The longer the period of stable financial conduct following completion, the more options may become available. This will still depend on lender criteria at the time of application.
Bankruptcy
Bankruptcy is a formal insolvency process and is normally treated as a significant credit event by mortgage lenders.
Some lenders may consider an application after you have been discharged, but the available options can depend on:
- How long ago the bankruptcy occurred
- When you were discharged
- The circumstances that led to the bankruptcy
- Whether any restrictions or related arrangements remain in place
- How you have managed credit and household finances since
- The size and source of your deposit
A specialist mortgage adviser may need to examine your full circumstances before identifying whether an application is appropriate.
Active and completed debt solutions
Whether the arrangement is active or completed can make a substantial difference to the way an application is assessed.
While the arrangement is active
Lender choice is generally more restricted during an active DMP, IVA or other repayment arrangement. A lender may also need to understand whether taking on a mortgage is permitted under the terms of the arrangement.
You should speak to the person or organisation managing your debt solution before making any new financial commitment.
After the arrangement has finished
Completion does not necessarily remove the associated credit history immediately. However, lenders may take account of the time that has passed and how your finances have been managed since completion.
Evidence of regular payments, controlled borrowing and stable bank account conduct may help demonstrate that your financial position has improved.
What lenders may consider
A lender will normally assess your complete financial position rather than looking at the debt solution in isolation.
How recent the debt solution is
Recent or active arrangements may have a greater effect on lender choice. Older, completed arrangements may be acceptable to a broader range of lenders, subject to their individual criteria.
Your recent payment history
Further missed payments, defaults or arrears following a debt solution may make an application more difficult. A sustained period of meeting commitments on time may be viewed more positively.
Your deposit
A larger deposit may reduce the lender’s exposure and could improve the range of options available. It does not, however, guarantee that an application will be accepted.
Income and affordability
You will still need to demonstrate that the mortgage is affordable. Lenders may review your income, regular expenditure, existing debts and potential changes to mortgage payments.
The reason for the financial difficulty
A lender or adviser may ask what led to the debt solution. Circumstances such as redundancy, illness, relationship breakdown or an unsuccessful business may be considered alongside your current position.
Other credit issues
Defaults, County Court Judgments, arrears and recent missed payments may also affect the assessment. Several different issues appearing together can further reduce lender choice.
Information you may need
Preparing the relevant documents can help an adviser understand your circumstances more efficiently. These may include:
- Credit reports from the main UK credit-reference agencies
- Confirmation that an IVA or other formal arrangement has been completed
- Details of any active debt management plan
- Recent bank statements
- Payslips or evidence of self-employed income
- Details of outstanding credit commitments
- Evidence showing the source of your deposit
Check that the information on your credit reports is accurate and that completed arrangements have been recorded correctly.
Steps that may improve your position
Depending on your circumstances, the following steps may help strengthen a future application:
- Maintain all agreed payments under an active arrangement
- Avoid unnecessary applications for new credit
- Keep household and credit payments up to date
- Reduce outstanding borrowing where practical
- Review your credit reports and correct inaccurate information
- Build a larger deposit where possible
- Keep recent bank statements free from avoidable unpaid items or unarranged borrowing
Do not end, alter or make additional payments into a formal debt solution without first obtaining appropriate guidance from the organisation managing it.
Common questions
Do I need to wait until a debt solution is completed?
Not in every case. Some lenders may consider an application during an active DMP, but options are usually more limited. Applications involving an active IVA or bankruptcy can be considerably more complex.
Will completing an IVA guarantee that I can get a mortgage?
No. Completion may improve your position, but approval will still depend on lender criteria, affordability, your deposit and your subsequent financial conduct.
Can I get a mortgage after bankruptcy?
It may be possible after discharge, depending on how long ago the bankruptcy occurred and the strength of the overall application. Lender choice may remain restricted for some time.
Will I need a larger deposit?
Possibly. Some lenders may require a larger deposit where a debt solution or significant adverse credit appears in your history. The amount required will depend on the full circumstances and current lender criteria.
Should I apply directly to several lenders?
Making several applications without understanding the relevant criteria can result in unnecessary credit searches. It may be helpful to have your circumstances assessed before submitting a mortgage application.
How Mortgage Bridge supports you
Mortgage Bridge provides general information to help you understand how previous debt solutions may affect a mortgage application. We do not provide mortgage advice or recommend particular lenders or products.
Where appropriate, we can introduce you to an FCA-regulated mortgage adviser who can assess your circumstances, review affordability and provide regulated advice.
Next steps
If you have used a DMP, IVA, bankruptcy or another debt solution, gather your credit reports and any documents confirming the status of the arrangement.
An FCA-regulated mortgage adviser can then consider the complete position and explain whether applying now may be appropriate or whether further preparation could improve your options.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.
Related Guides
Explore more advice that may help your situation.
CCJ Guides
Understand how CCJs sit alongside IVAs, DMPs and other solutions.
Default Guides
Check how historic defaults are treated once a debt solution has finished.
Credit Repair Guides
Practical steps for rebuilding your profile after completing a solution.
Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.