Getting a mortgage during an IVA is possible. However you will only be allowed to do so for very specific reasons and if you and your property fit certain criteria.
- Is it possible to get a Mortgage during an IVA?
- Can you release equity to settle an IVA early?
- Would you be able to move house?
- Could you buy your first property?
Want to get a mortgage during an IVA? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
Can you get a mortgage during or after an IVA?
Getting a mortgage during an Individual Voluntary Arrangement (IVA) is difficult. An IVA will make your credit rating worse. Can you get a mortgage during your IVA? Will you be able to apply for a mortgage once your IVA is finished? To find out more please visit: http://beatmydebt.com/individual-voluntary-arrangement/how-will-an-iva-affect-my-credit-rating
Is it possible to get a Mortgage during an IVA?
Getting a mortgage during an IVA is not easy. The first reason is your poor credit rating. High street lenders are generally unwilling to help because of this. You will therefore need to use an adverse lender.
Adverse lenders charge a higher rate of interest than those on the high street. As a result the repayments can be considerably higher. In addition they generally have stricter acceptance criteria.
The second issue is you are not allowed to borrow during your Arrangement without getting prior agreement from your Insolvency Practitioner (IP). If you do it could result in the failure of the agreement.
Your IP will usually be unwilling to let you get a mortgage during your IVA unless the purpose of doing so is to release equity from your home to settle the Arrangement.
Can you release equity to Settle your IVA early?
If you have started a monthly payment IVA it is likely to last 5-6 years. However it is possible to settle the Arrangement early. You can do this by offering a cash lump sum in place of the ongoing payments.
If you are a home owner you could raise a lump sum by releasing equity from your property. Adverse lenders are often prepared to lend to you for this purpose. Your IP should also agree if the offer is reasonable.
Of course you must have equity in your property. If you are in the first 2 years of your IVA you will only be able to borrow more if your current equity is greater than 25% of the value of the property. Over 2 years in this falls to 15%.
The terms of your IVA will normally state that you will always have to attempt to release equity from your property in the 5th year of the Arrangement.
Is it possible to Move House during an IVA?
If you are already home owner moving house during your IVA is not straight forward. Firstly you will not be able to sell your property without the agreement of your IP.
They will usually be happy for you to sell if you intend to use any equity released to settle your agreement. However if you want to use it to buy a new house they may not been so keen unless the move is critical for some reason.
Even if your IP is supportive it may be impossible to find a lender. Adverse lenders often only want to help if if the purpose of the mortgage is to settle your IVA.
If you have to move during an IVA but are unable to get a mortgage you may need to consider selling your property, settling the Arrangement and then going to rented accommodation for the time being.
Could you buy your first Property during an IVA?
If you are currently renting you might be thinking about buying a property during your IVA. Your IP may well support this if it means your expenses fall overall. Such a change would mean your creditors would benefit as the payments you make to them could increase.
However if you are in an IVA getting a mortgage to buy your first property is not normally possible. Firstly you will need a deposit. This would have to be provided by a third party as you will struggle to save a sufficient amount to fund it yourself.
Secondly it is unlikely that you will find a lender who will help. The adverse lenders available are normally only prepared to lend for the purpose of remortgaging to settle the IVA.
If you are living in rented accommodation it is usually best to concentrate on finishing your IVA before thinking about buying a home. Even if a suitable deposit could be raised you will struggle to find a lender who will help.
Your home may be repossessed if you do not keep up repayments on your Mortgage or other loans secured upon it.
Arrange a call with an IVA Expert
Your information will be held in strictest confidence and used to contact you by our internal team only. We will never share your details with any third party without your permission.