Getting a mortgage during an IVA is possible. However you will only be allowed to do so for very specific reasons and if you fit certain criteria.
Included in this article:
- Is it possible to get a mortgage during an IVA?
- Could you buy your first property?
- Can you settle your IVA by releasing home equity?
- Can you move house?
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.
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 because your mortgage payments would be less then your rent.
However getting a mortgage to buy your first property during an IVA is not normally possible. Even if you have a deposit in the current mortgage market is is unlikely any lender will help you.
If you are living in rented accommodation it is best to finish your IVA first before you think about buying a home. If you want to take advantage of a council right to buy scheme you will also have to wait until the record of the Arrangement comes off your credit file.
Adverse mortgage lenders are normally only prepared to lend for the purpose of remortgaging to settle an IVA early.
Can you Settle your IVA early by releasing home equity?
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 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 after the 54th month 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.
Interested in the options for mortgages during an IVA? Give us a call (0800 077 6180) or complete the form below to speak on one of our experts.
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Hello.
Is it possible to get a morgage while on a IVA. Never missed rent payment or payment for my vehicles. IVA is for out standing loans I had about 8 years ago
Hi Gary
As discussed above it is really only possible to get a mortgage during your IVA if you are already a home owner. The purpose would have to be to remortgage and release equity to settle the IVA.
If you are currently renting and want to buy you will need to wait until after your IVA is completed I am afraid.
Can I get a mortgage if my husband has IVA
Hi Dora
The answer is yes. Your credit rating is not affected by your husband’s IVA. As such you can get a mortgage in your name if you wish. However the size of the mortgage you can borrow will be determined by your income alone. Your husband can’t be named on the mortgage and his income can’t be taken into account.
Hi, My partner is currently paying an IVA. We are wanting to buy our first home, but I understand this may be impossible. Would he be more likely to be accepted for a mortgage if we would pay off his IVA in full earlier than its original finish date?
Hi Liz
I am afraid that paying off your partner’s IVA early will not have any positive impact on his ability to get a mortgage. This is because he will not be able to do so until the record of the IVA comes off his credit file. This is 6 years from the start date regardless of the date the IVA is completed / or paid off early.
Once the IVA is both completed and the record is gone from his credit file then there may be high street lender options open to him. The best thing to do would be to speak to a specialist broker at that time who should be able to help.