It is possible to move house while you are in an IVA. However it is difficult particularly if you are already a home owner.
Included in this article:
- Is it possible to move house while in an IVA?
- Moving to a new rented property
- Can you sell your house and buy a new one?
- Could you buy your first home?
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Is it possible to Move House while in an IVA?
If you are making monthly payments your IVA is likely to last 5-6 years. During that time you may need to move house particularly if you get a new job in a different area.
However whether you are currently living in rented property or own your own home moving during the Arrangement is not easy. One of the main issues you face is your credit rating.
Your poor credit rating will affect your ability to rent a new property and get a mortgage to buy a home. If you are already a home owner there are additional complications if you try and sell your property.
Moving house in an IVA is possible but not easy. Generally speaking it is best not to move if you can possibly help it.
Can you move to a new Rented Property in an IVA?
The easiest way to move house during an IVA is if you are going into a rented property. Having said that there are still considerable issues you will need to overcome.
Firstly if you plan to use a letting agent you need to understand they will carry out a credit check against you. You are likely to fail this because of your credit rating. Very often the only way round this problem is if someone is willing to act as a guarantor for the rent on your behalf.
Secondly you should ideally move to a property where the rent is similar to the amount currently allowed in your living expenses budget. If the rent is higher you will struggle to maintain your IVA payments. If it is lower your IVA payments may have to increase.
Speak to your IVA Company before moving to a property with a higher rent. They may be able to help by reducing your IVA payments if the move is absolutely unavoidable.
Can you sell your House and buy a new one during an IVA?
Selling a property that you currently own so that you can move house is extremely difficult in an IVA. The main problem is that under the standard terms of the Arrangement any money made from the sale is considered a windfall.
In other words if you sell your property any equity released will have to be paid into your IVA for the benefit of your creditors. It cannot be used as a deposit for your next home.
Your IVA Company may let you keep the equity released to use as a deposit in certain circumstances. However you must agree this with them BEFORE the sale. Even then you are unlikely to be able to get a mortgage to buy a new home.
If you cannot wait to move house until your IVA has finished your only option may be to rent out your property and move into rented yourself. This would allow you to make the move that you need without having to sell or apply for a new mortgage.
Could you buy your First Home during an IVA?
Buying your first house during an IVA is virtually impossible. The issue is finding a mortgage lender who would be prepared to work with you.
Generally speaking mortgage companies are not willing to lend to people who are currently in an IVA unless the purpose of the mortgage is to release equity from a current property to settle the Arrangement early.
Even if you were able to find a lender the next issue would be getting together the required deposit. The only way you would be able to do this is if friends or a family member were prepared to lend it to you.
It is normally best to delay buying your first property until after your IVA. Once it is completed a number of lenders may then be prepared to offer you a mortgage.
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Hi I’m in a Iva. only been in it for 1 year. my debt is only 4000 to one lender. I have a mortgage on my own on my house in my name but I’ve met someone and we went to move to a bigger house. will I be able to sell and get a joint mortgage with my partner? Also I have a possible off moving my shared ownership mortgage I have now over to a new property would this be better and more doable than selling and starting over again fresh?
Hi Sean,
There are a couple of things you need to be aware of here.
First, before you can sell your property you need to get the agreement of your IVA company. I am 100% certain that you would be required to use some of the proceeds of the sale to settle your IVA. As such before doing anything you need to speak to them and agree in writing exactly how much they would expect you to pay. They may have even put a restriction against your property preventing you from selling unless an agreement with them is reached.
Secondly, even if you are able to agree a way forward with your IVA company you need to remember that it will be very unlikely that you will be able to get any kind of mortgage in your name or in joint names with your partner until the record of your IVA has come off your credit file. This will not happen for 6 years from the start date whether you settle it early or not.
Hi – I’m hoping to move to a different area and I have an Iva – only about 4 months old. I have been renting the property I’m in for over 11 years. If I have to go to any agency for my next rental and I don’t have a guarantor what can I do ? Thank you
Hi Susma
As highlighted in the above article, moving to a new rented property during an IVA is often difficult due to your poor credit rating. The best option would be to use the same agency you have been with for the past 11 years. They know you and know you are a reliable tenant. As such they may be prepared to overlook the fact that your credit rating is now poor.
If you can’t use the same agent, my only advice is be honest with any new agent you approach. Tell them up front you are likely to fail the credit check. They will then tell you what (if any) options there are for them to work with you. Perhaps a recommendation from the previous agent / landlord would help?
So I’m looking to move out, I’m currently in an IVA, I’m looking at renting a place with my friend. What are my best options
Hi Dominic
Because your IVA has made your credit rating poor, moving to a new rented property is likely to be difficult.
If you are looking to move with a friend, the best option is for them to take the tenancy agreement in their name only with you as a permitted occupier. That way you would not need to undergo a credit check.
If your friend’s income is not sufficient to take the tenancy in their own name alone, then I strongly advise that you are up front with any letting agent you speak to. Tell them you have a poor credit rating and are likely to fail their credit check. Ask if they will still be prepared to deal with you. This will cut out any wasted time and expense.
You could offer to pay rent in advance or provide someone to act as a guarantor for the rent. Sometimes that will help.